About Using Savings to Pay Off Personal Loan

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Using savings to pay off a personal loan is not advisable because savings are intended to use for emergencies and long-term purchases. Keep savings for emergencies only with advice from a financial adviser in this free video on money management and financial planning.

Part of the Video Series: Credit Cards & Personal Loans
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Video Transcript

Hi, my name is Matt McKillen. I'm with Innovative Financial Group. The question posed to me today was, "Does it make sense to use your personal savings to payoff a personal unsecured loan?" Savings to me is really something that should be untouched. You know, we all have bills month to month and we have little, you know, emergencies financially that may arise here and there and I really think that's what the benefit of having a savings account is for, is to have that as a resource available. On a personal loan or a credit card, it doesn't make sense to me whatsoever to tap into a savings account to payoff that type of a debt. When you agreed to take the mortgage or the note out, it was based on being able to make the payments over period of time; probably based on your income, your pay stubs, what you're taking home from work. But I really think that it does not make sense to use a savings account as a way to payoff either personal loan debt or credit card debt for example. Either way savings should be saved for a rainy day or maybe for a purchase down the road. My name is Matt McKillen and I am with Innovative Financial Group.

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