It depends on your tax bracket and the interest rate (APR) charged by the credit card. Here's an example. If you are in the 15% marginal tax bracket, paying off an 18% credit card debt is equal to almost a 21% investment return. That's because you'd need to earn 21% before taxes to keep 18% after taxes (21 x 0.15 = 3.15 and 21 - 3.15 = 17.85). In the 28% marginal tax bracket, paying off an 18% APR credit card is equivalent to a 25% investment return. By earning 25% before taxes, you'd keep 18% after taxes (25 x 0.28 = 7 and 25 - 7 = 18). The higher your federal marginal tax bracket, the greater the equivalent investment return associated with debt repayment.
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