Should I pay off my credit cards or build an emergency fund? How much of an emergency fund should I have? What should I invest my emergency fund in? These are very common questions, especially for people who are early in their careers, just out of college or starting out fresh after a major life event. The general rule is that because credit card interest is very high (much higher than what you can earn on a savings account), it's better to pay off credit cards than to save. However, if an emergency does arise (car breaks down, an unexpected home repair, or medical payment), you will need to use the credit card to cover the emergency expense, which can put you back in the same place. Also, your home equity is not an emergency fund, as I have written about before -