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Low Interest Loan Repayment or CD/HY Savings (self.personalfinance)

submitted 10 months ago by Copernican to c/[email protected]

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Looking to pay off $15k of student loan debt of my partner. It's something we could wipe out with cash on hand if we wanted to relatively quickly. But one of the loans is 4.5%. Am I better off just riding that out but keeping the cash in for that loan in a HY savings account or keep reinvesting it in short term CD's that have a 5% return and to have more liquidity?

There's a part of me that used to really enjoy the piece of mind of being debt free when I paid off my student loans. But now that I'm more financially established and disciplined, I'm wondering if it's better to pay it off slowly.

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[–] [email protected] 4 points 10 months ago

The difference is too minor in my opinion, in addition if interests rates begin to drop, that .5% gain may turn negative. I say focus on paying off the loan, while ensuring you have sufficient savings. As others have said, you will also have to pay taxes on what you gain if you stored your money so the .5% is basically nothing