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Help me decide: Should I pay down debt, save or invest?

Use tool, 5 minutes

You’re pulling in a decent income. You want to start planning your financial future, but also want to pay down your existing debt. How do you find the right balance between saving, investing and managing debt?

You can get started by using this interactive tool. We’ll help you better understand your specific financial situation and how you might best focus your efforts.

Note: Your savings choices have important tax implications, including rules for tax exclusions and deductions for contributions to employer-sponsored accounts and IRAs.  Consult your tax advisor when making your savings decisions.

Let’s get started.

Disclaimer

The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2025 Bank of America Corporation.

What to read next

Do you have credit card debt?

Yes
No
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Make a plan to pay off your high interest bills

Most credit card interest rates are significantly higher than most other kinds of loans, so wiping out that debt will not only reduce the amount of total interest you’ll pay but will give you the ability to budget for other priorities. Paying your credit card bill in full each month is a great first step.

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Learn more

How to get out of credit card debt faster

Read more, 10 minutes

Well done! Staying out of credit card debt can positively affect your mental and physical health.

If you’re paying your bills in full each month, you’ve already got a strong foundation for your financial goals. Congratulate yourself!

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Do you have an emergency fund?

Yes
No
Start over

Keep your emergency fund going!

That’s great. An emergency can help offset unexpected expenses, such as a car repair or unexpected bill, without disrupting your progress toward paying off your credit card debt.

Quick tip

The rule of thumb is to have three to six months’ worth of expenses in an emergency fund, but that amount may vary with your situation.

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Why do I need an emergency fund – and how can I build one?

Building an emergency fund may sound difficult when you’re trying to dig yourself out of credit card debt, but consider that credit cards have an average 19.1% interest rate – and should an emergency arise, such as an unexpected medical expense, using your credit card will just make it harder to pay down.

Even if you start small, your emergency fund can grow quickly while you’re simultaneously paying down the debt. If you’re wondering how much you need to save, the general rule of thumb is three months’ worth of living expenses if you’re single, nine months for a family. Look at what you might be able to trim your monthly expenses and schedule automatic transfers directly into your emergency savings account.

Next question
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Learn more

How to start building an emergency fund

Read more, 3 minutes

How to get out of credit card debt faster

Read more, 10 minutes

Do you have an emergency fund?

Yes
No
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Great work! Let’s start thinking about other financial goals

With an emergency fund in place and no credit card debt, you’ve already got a strong foundation for your financial goals. Congratulate yourself!

Next question
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Building your emergency fund will bring you greater financial security and peace of mind

Since you’re already free of credit card debt, you’ll want to start building up your emergency fund. Start by determining how much you should be saving. Setting a goal of $100 a month—that’s as little as $3 to $4 a day — is a great start.

Next question
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Get more tips for jump-starting your emergency fund

How to start building an emergency fund

Read more, 3 minutes

Are you planning for retirement?

Yes, employer-sponsored retirement account
Yes, IRA
Yes, both
No
Start over

Contribute to your employer-sponsored retirement account while you build an emergency fund

An employer-sponsored retirement account is a great way to invest in your retirement. And if your employer matches retirement account contributions, it’s smart to contribute up to the amount an employer will match – otherwise you’re leaving money on the table and missing out on short-term tax benefits. Simultaneously you can be jump-starting your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

Participate in retirement plans to potentially grow your money

IRAs are available to almost anyone earning income, and can provide some tax benefits. While contributing to your IRA, you can simultaneously be jump-starting your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

Participate in retirement plans –for tax benefits and the potential for your money to grow

IRAs and employer-sponsored retirement account are great ways to build your retirement, but you should simultaneously be jump-starting your emergency fund so you won’t be forced to pause your retirement savings, or worse, make a premature withdrawal, if something unexpected comes up. The fund doesn’t need to be fully funded, making progress against it is the goal. So now let’s talk about your other savings goals.

Next question
Start over

Does your employer offer a retirement plan?

Yes
No
Start over

Don’t leave “free money” on the table

If your employer matches your retirement account contributions, it’s a smart move to contribute up to the amount an employer will match to gain added contributions as well as tax benefits. Simultaneously, you can begin to build your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

It’s time to start looking into IRAs

IRAs are available to almost anyone earning income, but you’ll want to pursue jump-starting your emergency fund while simultaneously planning for your retirement. Now let’s talk about your other savings goals.

Next question
Start over

Learn more about which IRA
is right for you

What is an IRA? Everything you need to know

Read more, 4 minutes

Are you planning for retirement?

Yes, employer-sponsored retirement account
Yes, IRA
Yes, both
No
Start over

By participating in a retirement plan, you’re taking advantage of tax-free benefits that can help your money grow

Well done! IRAs – which are available to almost anyone earning income – are different from employer-sponsored retirement account, which you can only participate in if your employer offers one. With your emergency fund in place and no outstanding credit card debt, you can max out your contributions to your retirement fund. It’s a smart move. Let’s talk about your other savings goals.

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Participating in retirement plans means you’re taking advantage of tax-free benefits to watch your money grow

Well done! With your emergency fund in place and no outstanding credit card debt, maxing out your contributions to both your retirement funds is a smart move. Now, let’s talk about your other savings goals.

Next question
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Does your employer match employer-sponsored retirement account contributions?

Yes
No
Start over

Contributing to your employer-sponsored retirement account is a good move even if your employer isn’t matching

With your emergency fund in place and lack of credit card debt, contributing to your employer-sponsored retirement account can still offer significant tax advantages and set you up for long term savings. Now, let’s talk about your other savings goals.

Next question
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Are you maximizing employer-sponsored retirement account contributions to take advantage of matching?

Yes
No
Start over

You’re maximizing your “free money” from your employer – now let’s focus on your debt.

Congrats on capturing your employer’s match money. It’s really hard to beat the return on it! You’ll want to make sure your contribution is maximizing the full amount your employer matches, so that you’re taking full advantage of the offer. With your emergency fund in place, you can focus on paying off any credit card debt before increasing your employer-sponsored retirement account contribution beyond the match amount.

Next question
Start over

Don’t leave “free money” on the table!

If your employer matches your 401(k) contributions, it’s smart to contribute up to the amount an employer will match. Otherwise, you’re leaving money on the table and it’s really hard to beat the return on it! Beyond that, you should aim to reach the IRS’s maximum contribution limits to an employer-sponsored retirement account while simultaneously paying off your credit card debt.

Next question
Start over

Does your employer offer a retirement plan?

Yes
No
Start over

Don’t miss out on employer-sponsored retirement account match.

If your employer offers a retirement plan, it’s smart to contribute at least as much as your employer is matching. It’s really hard to beat the return on it! You’ll want to make sure your contribution reaches the capped amount, so that you’re taking full advantage of the offer and not leave money on the table. This not only saves you pre-tax dollars, but lets you grow your nest egg faster. With your emergency fund in place and no credit card debt you can thinking about your next financial priority.

Next question
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It’s time to start looking into IRAs

With an emergency fund in place and no credit card debt, you should start saving for retirement. Even if your employer does not offer a retirement plan you still have options. There are several different types of IRAs. Each has its own requirements and features, but all offer important tax advantages that could help you save more for your future.

Next question
Start over

Learn more about which IRA
is right for you

What is an IRA? Everything you need to know

Read more, 4 minutes

Are you planning for retirement?

Yes. 401k
Yes, IRA
Yes, both
No
Start over

Contribute to your employer-sponsored retirement account while you build an emergency fund

An employer-sponsored retirement account is a great way to invest in your retirement. And if your employer matches retirement account contributions, it’s smart to contribute up to the amount an employer will match – otherwise you’re leaving money on the table and missing out on short-term tax benefits. Simultaneously you can be jump-starting your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

Participate in retirement plans to potentially grow your money

IRAs are available to almost anyone earning income, and can provide some tax benefits. While contributing to your IRA, you can simultaneously be jump-starting your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

Participate in retirement plans –for tax benefits and the potential for your money to grow

IRAs and employer-sponsored retirement account are great ways to build your retirement, but you should simultaneously be jump-starting your emergency fund so you won’t be forced to pause your retirement savings, or worse, make a premature withdrawal, if something unexpected comes up. The fund doesn’t need to be fully funded, making progress against it is the goal. So now let’s talk about your other savings goals.

Next question
Start over

Are you planning for retirement?

Yes, employer-sponsored retirement account
Yes, IRA
Yes, both
No
Start over

Start building your long-term savings while paying down your debt.

One of the best ways to set yourself up for the future is by ridding yourself of debt, but you can simultaneously be funding your retirement account and maintaining your emergency fund once you determine your budget. Making progress against all three areas is the goal.

Next question
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Learn more

Setting short- and long-term goals can help you stick to a budget. Use Bank of America’s short-term savings calculator to see how long it will take to save for your goal.

Great! You have a cushion to start paying down credit card debt.

Congrats on capturing your employer’s match money in your 401(k). You’ll want to make sure your contribution reaches the amount to take full advantage of the match. With your emergency savings in place, you’ll want to budget carefully to determine how best to pay off the credit card debt while contributing to your retirement accounts so you won’t be forced to pause your retirement savings, or worse, make a premature withdrawal, if something unexpected comes up.

Next question
Start over

Are you planning for retirement?

Yes, employer-sponsored retirement account
Yes, IRA
Yes, both
No
Start over

By participating in a retirement plan, you’re taking advantage of tax-free benefits that can help your money grow

IRAs are available to almost anyone earning income, but you’ll want to pursue paying down your debt while building your long-term savings and getting your emergency fund in place. Your retirement fund does not need to be fully funded, making progress against it is the goal. Now let’s talk about your other savings goals.

Next question
Start over

Participating in retirement plans means you’re taking advantage of tax-free benefits to watch your money grow

IRAs and 401(k)s are great ways to build your retirement, but you’ll want to pursue paying down your debt while building your long-term savings and getting your emergency fund in place so you won’t be forced to pause your retirement savings, or worse, make a premature withdrawal, if something unexpected comes up. Your retirement fund does not need to be fully funded, making progress against it is the goal. Now let’s talk about your other savings goals.

Next question
Start over

Does your employer offer a retirement plan?

Yes
No
Start over

Don’t leave “free money” on the table

If your employer matches your retirement account  contributions, it’s a smart move to contribute up to the amount an employer will match to gain added contributions as well as tax benefits. Simultaneously, you can begin to build your emergency fund. The fund doesn’t need to be fully funded, making progress against it is the goal.

Next question
Start over

It’s time to start looking into IRAs

IRAs are available to almost anyone earning income, but you’ll want to pursue jump-starting your emergency fund while simultaneously planning for your retirement. Now let’s talk about your other savings goals.

Next question
Start over

Learn more about IRAs

What is an IRA? Everything you need to know

Read more, 4 minutes

Does your employer offer a retirement plan?

Yes
No
Start over

Don’t miss out on “free money”

With an employer 401(k) match, it’s smart to contribute at least the amount an employer will match. Otherwise, you’re leaving money on the table and missing out on short-term tax benefits —consider it even if you have credit card debt.

Next question
Start over

Staying ahead of high-interest debt is a top priority

One of the best things you can do to set yourself up for the future is to rid yourself of “bad” debt. With an emergency fund in place, you’re on a strong path. Now you can focus on paying down your credit card debt while starting to fund your retirement and benefitting from the tax advantages that come with an IRA.

Next question
Start over

Learn more about IRAs

What is an IRA? Everything you need to know

Read more, 4 minutes

Does your employer match employer-sponsored retirement account contributions?

Yes
No
Start over

Staying ahead of high-interest debt is a top priority

One of the best things you can do to set yourself up for the future is to rid yourself of “bad” debt. With an emergency fund in place, you can focus on paying off any high-interest credit card debt while starting contributions to an IRA. Credit card interest rates are traditionally higher than the return you’ll receive from the market.­

Next question
Start over

Learn more about IRAs

What is an IRA? Everything you need to know

Read more, 4 minutes

Does your employer offer a retirement plan?

Yes
No
Start over

Don’t miss out on employer-sponsored retirement account match.

If your employer offers a retirement plan, it’s smart to contribute at least as much as your employer is matching. That not only saves you pre-tax dollars, but lets you grow your nest egg faster. You’ll want to simultaneously pursue paying down your debt while building your long-term savings and getting your emergency fund in place. Your retirement fund does not need to be fully funded, making progress against it is the goal. Now let’s talk about your other savings goals.

Next question
Start over

It’s time to start looking into IRAs

IRAs are available to almost anyone earning income, but you’ll want to pursue paying down your debt while building your long-term savings and getting your emergency fund in place. Your retirement fund can offer important tax advantages that could help you save more for your future, but it does not need to be fully funded—making progress against it is the goal. Now let’s talk about your other savings goals.

Next question
Start over

Learn more about IRAs

What is an IRA? Everything you need to know

Read more, 4 minutes

Does your employer match sponsored retirement account contributions?

Yes
No
Start over

Are you maximizing employer-sponsored retirement account contributions to take advantage of matching?

Yes
No
Start over

Contributing to your employer-sponsored retirement account is a good move even if your employer isn’t matching

One of the best things you can do to set yourself up for the future is to rid yourself of debt. Paying off any high-interest credit card debt while starting contributions to your employer-sponsored retirement account and building your emergency fund can be done simultaneously if you budget accurately.

Next question
Start over

Tips for creating a personal budget

Your guide to creating a budget plan

Read more, 12 minutes

You’re maximizing your “free money” from your employer – now let’s focus on your debt.

Congrats on capturing your employer’s match money. It’s really hard to beat the return on it! You’ll want to make sure your contribution is maximizing the full amount your employer matches, so that you’re taking full advantage of the offer. With your emergency fund in place, you can focus on paying off any credit card debt before increasing your employer-sponsored retirement account contribution beyond the match amount.

Next question
Start over

Don’t leave “free money” on the table!

If your employer matches your 401(k) contributions, it’s smart to contribute up to the amount an employer will match. Otherwise, you’re leaving money on the table and it’s really hard to beat the return on it! Beyond that, you should aim to reach the IRS’s maximum contribution limits to an employer-sponsored retirement account while simultaneously paying off your credit card debt.

Next question
Start over

Are you maximizing employer-sponsored retirement account contributions to take advantage of matching?

Yes
No
Start over

You’re smart to maximize your employer’s “free money.”

Congrats on capturing your employer’s match money. You’ll want to make sure your contribution reaches the maximum amount your employer matches, so that you’re taking full advantage of the offer. Paying off any high-interest credit card debt while starting contributions to your employer-sponsored retirement account and building your emergency fund can be done simultaneously if you budget accurately.

Next question
Start over

Tips for creating a personal budget

Your guide to creating a budget plan

Read more, 12 minutes

Don’t leave “free money” on the table!

If your employer matches your employer-sponsored retirement account contributions, you’d be smart to contribute up to the match amount. Paying off any high-interest credit card debt while starting contributions to your retirement account and building your emergency fund can be done simultaneously if you budget accurately.

Next question
Start over

Tips for creating a personal budget

Your guide to creating a budget plan

Read more, 12 minutes

What are your other savings goals?

Savings goals can include anything from paying down debts (such as student loans, card payments or a home equity line of credit) to saving for a specific purpose (such as a vacation, the down payment on a home, or your retirement).

Other loans
Down payments
Bucket list savings
Investing
Start over

Debt can be a good thing. Pay extra to save on interest payments.

Compared to credit card debit, other loans such as auto loans, home loans or student loans may have more favorable interest rates. But having a plan to pay down these “good” debts is still important.

Quick tip

Make one extra monthly payment a year to save on interest payments and chip away at this debt.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

Strategies for paying down debts

Watch video, 4 minutes

6 ways to tackle financial stress

Read more, 5 minutes

Being financially prepared for big purchases is great - you’re ready to build that up!

Whether you are looking to put a down payment on a home or to purchase a car, automating payments to a savings account can help you get there.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

This way to a home of your own

Read more, 4 minutes

Simple ways to save money for the future

Read more, 11 minutes

Buying a car? Here are the key terms to know about auto loans

View infographic, 3 minutes

Open a special savings account for special goals — preferably one with high-yields.

Always dreamed of going to Hawaii or taking an entire month off work? Whatever your goal, putting money into a dedicated savings account – and one with high yields could help you reach your goal faster.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

Simple ways to save money for the future

Read more, 11 minutes

Tools that help make saving simple

Read more, 2 minutes

How to save money

Explore visual story, 1 minute

Investing in a non-tax advantage account is another avenue to grow your wealth.

You pay off your credit cards monthly, have an emergency fund and have maximized your contributions to a retirement plan. What next? Consider investing in a non-tax advantaged account – a brokerage account or individual stocks – as another avenue to grow your wealth.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

3 ways to start investing

Watch video, 5 minutes

Pay yourself first: Prioritize your financial goals

Read more at merrilledge.com

What are your other savings goals?

Savings goals can include anything from paying down debts (such as student loans, card payments or a home equity line of credit) to saving for a specific purpose (such as a vacation, the down payment on a home, or your retirement).

Other loans
Down payments
Bucket list savings
Investing
Start over

Some kinds of debt can be a good thing. Pay extra to save on interest payments.

Compared to credit card debit, other loans such as auto loans, home loans or student loans may have more favorable interest rates but applying for them while still carrying high-interest debt (e.g., credit cards) may impact your application. While it’s possible to pay off your debt while taking on an additional loan, you’ll want to have a plan in place to rid yourself of the high-interest debt without getting behind on your “good’ debts.”

Quick tip

Make one extra monthly payment a year to save on interest payments and chip away at debt.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

Pay off credit card debt faster

Explore visual story, 1 minute

6 ways to tackle financial stress

Read more, 5 minutes

Being financially prepared for big purchases is great.

Saving for a down payment on a home or to purchase a car while still carrying high-interest debt (e.g., credit cards) is possible, but it will take some planning. Automating payments to a savings account—even a small amount each month—can help you get you to your savings goal. You’ll also want to have a plan in place to rid yourself of the high-interest debt which can ultimately help your credit and reduce your debt-to-income ratio when you are ready to make that down payment.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

This way to a home of your own

Read more, 4 minutes

Simple ways to save money for the future

Read more, 11 minutes

Buying a car? Here are the key terms to know about auto loans

View infographic, 3 minutes

Open a special savings account for special goals — preferably one with high-yields.

Always dreamed of going to Hawaii or taking an entire month off work? Whatever your goal, putting money into a dedicated savings account – and one with high yields could help you reach your goal faster. Simultaneously, you’ll want to have a plan in place to rid yourself of high-interest debt once and for all so you can fully enjoy your bucket list trip.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

Simple ways to save money for the future

Read more, 11 minutes

Pay off credit card debt faster

Explore visual story, 1 minute

How to save money

Explore visual story, 1 minute

Investing in a non-tax advantage account is another avenue to grow your wealth.

Once you’re paid off your credit cards monthly, have an emergency fund and have maximized your contributions to a retirement plan. What’s next? Consider investing in a non-tax advantaged account – a brokerage account or individual stocks – as another avenue to grow your wealth.

Now that you've reached the end of the exercise, we hope you have a better sense of your priorities and a few helpful tips to achieving your goals. Remember, your financial journey is just that – a journey. Try out different solutions and see what works best for you. Then, make adjustments as you go to find the path that best suits you.

Start over

Learn more

3 ways to start investing

Watch video, 5 minutes

Pay yourself first: Prioritize your financial goals

Read more at merrilledge.com