The word “investment” likely brings to mind stocks and bonds, but the best return on your money might be obtained by tackling consumer debt. NerdWallet’s annual consumer credit card report found that 18% of Americans say rising interest rates have made their overall debt more expensive. While you can’t predict what money invested in the stock market will make this year, paying off high-interest debt provides you with a guaranteed bang for your buck.
Learn more: What’s the best way to get rid of credit-card debt — pay off the smallest balance first or the one with the highest interest rate? You might also find a consolidation loan that offers a lower interest rate than you’re paying now. Loan rates have also been rising, but if you have good credit and need a longer timeline than a balance transfer card will give you, it could make sense to seek out a loan and make a fixed monthly payment for a specified period of time.
There are exceptions to this. If you have a workplace retirement account — such as a 401 — with an employer match, it makes sense to continue contributing enough to capture the full match. That’s free money and likely equates to a return higher than 20%, though you’ll need to look at the specifics of your company’s match policy.