Rainy Days Happen.
A savings account is useful when people are faced with an emergency, such as unemployment, unexpected car repairs or costly medical bills. Having money in savings in these circumstances helps people survive the crisis and keeps them from relying on credit cards to bail them out.
Debt Accumulates Fast.
Consumers pay interest on credit card debt and earn interest on their savings. However, these two types of interest don't come close to canceling each other out. Interest rates on credit cards are far higher than savings rates, meaning credit card debt can cost consumers money in the long run.
Bottom Line
Debt guru Dave Ramsey recommends people set aside a small emergency fund of $1,000. Then, The Motley Fool website suggests consumers should aggressively pay off their credit card debt.
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