Carlos has been working in a restaurant and wants to save enough money to take a
course as a cook. However, he owes $4,500 on his credit cards, and at 18 percent
per year, he pays almost $70 a month in interest. He thinks he can save about $150
a month to put into a savings plan for his education. What savings strategy would
you recommend he use?
- Pay the entire $150 a month to his credit cards (and more if he can)
- Deposit his money in a Tax-Free Savings Account based on five-year term deposits
with a guaranteed return of 3.4 percent per year
- Deposit his money in a Tax-Free Savings Account based on two-year term deposits
at his bank, which pays 2.25 percent interest per year
- Deposit his money in a savings account at his credit union, which pays 0.5 percent
interest per year.
