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Should I use extra money to pay down credit card or student loan

Valued Member

Should I use extra money to pay down credit card or student loan

I have been stewing on this question for a few months now and I just need help. 

 

My credit scores are in the 775 to 790 depending the bureau. 

 

I have

Credit card debt of 3200 - 0% until January 2018. The company has sent me offers for balance transfers to extend this to end of 2018 if I choose.

 

Student loan debt

3 loans all at 3.83 (but variable interest rate and it has been slowly going up). These are private and the final payment is due Oct 2018 (this can't be extended so this is the deadline).

 

1300

1700

2200

 

I have about an extra 150 I can put toward something every month.

 

Should I pay down the 0% credit card, or put it toward the student loans (if I do that I would probably have two paid off by the end of the year). 

 

I might need a new car in the next twelve months...it is better to pay the credit card and inch my score up? Or should I pay off the two loans which would be two less debts on my file? 

 

I'm so confused!Smiley Frustrated

 

Thanks!

 

 

 

Message 1 of 21
20 REPLIES
Frequent Contributor

Re: Should I use extra money to pay down credit card or student loan

with your scores, assuming they are fico scores, then the scores dont matter. you should focus on paying off the stuff that's costing you money in interest.

Last app 1/2/2017.
In the garden until at least 6/2/2017.
Message 2 of 21
Established Contributor

Re: Should I use extra money to pay down credit card or student loan

Yeah if those are FICO scores you are good to go, I'd pay off the ones with interest first.

Message 3 of 21
Valued Contributor

Re: Should I use extra money to pay down credit card or student loan

 

Like the other posters mentioned pay the highest I test first, which is probably your credit cards. Also, interest in student loans are tax deductible 

Message 4 of 21
Valued Contributor

Re: Should I use extra money to pay down credit card or student loan

Pay off interest loans, 0% is costing you nothing! Smiley Happy
Message 5 of 21
Senior Contributor

Re: Should I use extra money to pay down credit card or student loan

Yeah you can pay off whatever you want, as increasing your FICO scores will have no bearing on getting a better auto loan interest rate a year from now since you're already in the top bracket.

Message 6 of 21
Community Leader
Valued Contributor

Re: Should I use extra money to pay down credit card or student loan

I would pay off two of the student loans. Once you pass about 740 there's minimal gain from higher FICO scores for most purposes. If the student loans are your only installment loans, I would certainly suggest leaving at least a small balance on one until you secure an auto loan as that could cost you a lot of points with none open. As for student loan interest being deductible, that is income-dependent. Unfortunately I have a lot of student loan debt but none of it is deductible at the federal level. Smiley Sad

$500k+ club. | FICO 08 [Oct 2017]: EQ 746 EX 738 TU 733 | World's worst gardener.
Message 7 of 21
Frequent Contributor

Re: Should I use extra money to pay down credit card or student loan

I'd hit the credit card debt personally. $150 a month until the end of 2018 (longest amount of time for interest only period) is $2850 and that will almost wipe out your cc debt before the interest only period is up.

I disagree with the posters saying to hit the student loans first. Although they are a higher rate now than your 0%, the problem is that your CC debt will sky rocket to much higher than 0% once the intro period is over. Your student loans on the other hand will stay where they are now. The risk of paying 10-25% interest on your CC debt when the 0% period is over outweighs the upside of saving 3.8% on student loans.
812 FICO (TransUnion) | 809 FICO (Experian)
Chase Sapphire Reserve - $60,000 | Barclays AAdvantage Aviator Red - $36,500 | Amex Blue Cash Everyday - $30,000 | Fidelity Visa Signature - $20,000 | Chase Freedom - $20,000 | Bank of America Cash Rewards $22,000 | Wells Fargo Plat Visa (runt of the litter!) - $4,400
TOTAL: $192,900
Message 8 of 21
Established Member

Re: Should I use extra money to pay down credit card or student loan

I agree, pay off the CC debt first, unless you know for a fact that you will be able to save $3200 by the end of 2018 to PIF the CC before the 0% promo expires. If you can do that while also putting additional payments to your student loan debt, then obviously that's the best situation. If you can't do both, then I say pay off the CC first. You can always play catch up on the student loans later.

 

Edit: Also, don't know if you can do this with private student loans, but is it possible to reconsolidate them and get a fixed interest rate?

Message 9 of 21
Regular Contributor

Re: Should I use extra money to pay down credit card or student loan

I vote for the CC debt, if you use those cards for everyday purchases too. Once that 0% expires, the interest rate will probably shoot to the moon. 

 

 

Your scores overall are solid.

 

I wouldnt worry about those if you keep progressing in the manner you've been going and paying off your debt. With an auto loan/lease, your scores and with the assumption of adequate income/no baddies whatsoever on your report, you'd be a candidate for Tier 1 leasing or financing no matter what dealership you went to. 

 




Scores: 745 TU (Barclay), 743 EX (Fico8)

Chase Freedom Unlimited (6k), CSP (20k), Amex Delta Platinum (13.5k), Barclay Apple (12.5k), USBank Flexperks Travel Rewards (9k)
Message 10 of 21