Why Financial Experts Suggest Paying Down Debt Before A Recession

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While the possibility of a recession has left many Americans feeling uncertain about their finances, most financial experts agree on one key piece of advice to prepare for an economic turndown: pay down as much debt as possible.

Paying down debt is always an important step to take, but when a recession looms, doing so holds even more power than you might think.

“In general, recessions are characterized by lower economic growth and higher uncertainty. Since both of these things typically cause higher unemployment and lower income, recessions make us defensive in the way that we think about money, reducing our spending and driving us to protect our savings,” says Katherine Salisbury, co-founder of Qapital, a popular finance app. “Jobs and business income are in greater jeopardy, and we try to give ourselves greater slack so that we can be prepared for a variety of negative outcomes.”

Select asked Salisbury to weigh in on the reasons why financial experts say to pay down debt in order to prepare for a recession.

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You’ll have more credit available for tricky situations

You could avoid having to pay higher interest rates

You may not have to seek out other sources of credit

How to pay down your debt efficiently

US Bank Visa® Platinum Card

On US Bank’s secure site

  • rewards

  • welcome bonus

  • annual fee

  • Enter APR

    0% for the first 20 billing cycles on balance transfers and purchases

  • Regular APR

    15.99% – 25.99% (Variable)

  • Balance transfer fee

    Either 3% of the amount of each transfer or $5 minimum, whichever is greater

  • Foreign transaction fee

  • Credit needed

Citi Simplicity® Card

  • rewards

  • welcome bonus

  • annual fee

  • Enter APR

    0% for 21 months on balance transfers; 0% for 12 months on purchases

  • Regular APR

  • Balance transfer fee

    5% of each balance transfer; $5 minimum

  • Foreign transaction fee

  • Credit needed

Publisher Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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