09-16-2009 07:26 AM
tl9606, I preference my response by saying that you are the only one that can ultimately decide what to do based on your situation. Nonetheless, being a recent graduate myself, I would advise you to not use the student loan refund to pay off your credit card debt. First, a student loan is an installment loan that can not be dismissed in bankruptcy. Not saying that you would ever not pay your bills. However, most people file bankruptcy because of medical emergencies. I personally would apply the refund check to my student loans. Second, credit card debt is revolving and can be dismissed in a bankruptcy proceeding. And third, as was previously mentioned, you definitely shouldn't consider it if you don't change your habit that caused the debt in the first place.
Just my two cents. Good luck and I wish you the best!
09-16-2009 08:31 AM
09-16-2009 08:57 AM
The interest rate for the student loan is 6.8% and is fixed...I got $9500 in the student loan check, so i would be able to completely wipe out my credit card debt this month
Is the interest deferred until after you graduate? (When does it start accruing?) When do you have to start paying?
09-16-2009 09:34 AM
tl9606 I agree with rome0047 that the nature of the debt is also important . the credit card can be obliterate in BK and student loans cannot. My opinion still stands considering the fact your wife fico is abouve 800. paying off the debt with have minimal impact on the rate at which you borrow ( again the only reason for FICO). But the peace of mind and satisfction of not having CC debt is priceless I understand that.
If you have money enough for your downpayment 20% ideally to avoid the PMI then you will have three CCC's credit ie high FICO = low interest, and Capital being your main here.
if you do NOT have the 20% downpayment to avoid PMI , the money can be saved and use for house downpayment ( investment). this will be more valuable in the long run. If however your income to debt ratio is above the ideal 30%, in calculating your mortgage and the minimal CC payment is going to be too close to the ideal limit of income to expense then Pay of the CC. paying them of with the student loan is not a good idea but for my brief explanation about the house it might be worth it.
so do the math again, the temptation is always great to move money around but the cost of doing so is always the bottom line.