3 smart things to do with $1,000

Have some money — say, $1,000 — to invest and not quite sure where to put it?

Personal finance experts say these are smart things to do with $1,000, in any market environment.

Apply it toward credit card debt

“Tackling credit card debt is one of the best things you can do,” says Ted Rossman, industry analyst with CreditCards.com.

After all, rates have been rising over the past few years to a current national average of 17.47 percent, which is a record high.

“If that’s your rate and you owe $5,700 (what the average household currently carries, according to the Fed), and wanted to pay this off in a year, you’d have to pay $521 per month and you’d end up paying $554 in interest,” says Rossman.

If you were to apply a $1,000 lump sum, it would cost you $430 per month to pay off your now $4,700 balance in a year, and you’d pay $457 in total interest.

“That $1,000 lump sum would free up $91 per month and save $97 in interest over the course of the year,” says Rossman.

To turbocharge your savings, consider signing up for a balance transfer card and apply the $1,000.

Among those cards that do not charge transfer fees and offer 15 months with 0 percent interest: Chase Slate, BankAmericard and Amex Everyday.

Just promise yourself you’ll pay off the remaining $4,700 within that 15-month window (15 payments of about $313).

“This scenario offers you the lowest monthly payment, and no interest or fees,” says Rossman.

Establish an emergency fund

A new 2019 Bankrate survey found that most Americans (60 percent) are largely unprepared to pay for unexpected expenses, such as a car repair or emergency room visit, from their savings. More than a third would need to borrow the money in some way, and those expenses typically end up on a credit card.

At the national average rate of 17.47 percent, a $1,000 balance with minimum payments would take 61 months to pay off (more than 5 years) and accrue $510 in interest.

Rossman suggests opening up a basic money market account.

“They don’t offer much reward (Rates on FDIC-insured, fully liquid online savings accounts are in the 2 percent range.), but liquidity is key -— you can take the money out whenever you need it and not be penalized the way you would if you were in CDs.”

Sock it in a retirement account

You have until April 15th, 2019, to make your IRA contributions for 2018.

If you are unable to max out ($5500; $6500 for those 50 and older), remember that every little bit helps. (Whether in a traditional IRA, which shrinks your taxable income, or a Roth IRA, which offers tax-free withdrawals in retirement.)

Over 10 years, a $1,000 investment growing at 8% yields you $2,159; over 20 years, that number jumps to $4,661.

“Your future self will thank you,” says Rossman.

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