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New Member
Creditorated
Posts: 4
Registered: ‎10-14-2013
0

Which debt should I pay it off first? HELP!

Hi

 

I currently have 2 Credit Cards and one auto loan.

 

2 Credit cards are under my name and SSN and auto loan is actually under my uncle's name and SSN. 

 

I have one credit card with about $9K balance, this card has 0% APR until JUNE 2014 and for the car I pay about $350/mo for car loan and has $10K balance left.

 

So, I have about $10K coming in from my bonus within couple of weeks, and I have no idea if I should pay off my credit card or my car or maybe half and half?

 

If I pay off my car, It doesn't affect my credit score at all but I can save $350 a month. And car loan only has 3.9% APR Included in that $350.

 

If I pay off my credit card with $9K balance, my credit score will be improved, but I will still have to pay $350 a month for my car.

 

Credit card will start adding its interests on July 2014, so it would be better for me to avoid those ridiculous interests.

 

What do you suggest? Any comment is appreciated.

 

Thanks!

New Contributor
stillworking
Posts: 72
Registered: ‎09-25-2013
0

Re: Which debt should I pay it off first? HELP!

[ Edited ]

Well it depends on your goals.  If your goal is to release your uncle from the car loan; have at it.  If you need a score boost, pay the credit cards; in the event you want to buy a house soon.  The other option would be to pay half and half.  Start to decrease your utilization on the cards and then increase your monthly payment amount. What are the interest rates on the cards?  Can you pay extra to get your utilization decreased by the time the interest kicks in?


Starting Score: 525
Current Score: FICO EQ 790, TU 696, EX 683
Goal Score:
700+ across the board

New Member
Creditorated
Posts: 4
Registered: ‎10-14-2013
0

Re: Which debt should I pay it off first? HELP!

APR on credit card is 24.9%

 

I would definitely pay that credit card off completely before APR starts to kick in. My uncle doesn't really care about that loan, since I never missed any payment but it would be great if I don't have anything to pay monthyl other than my regular utilities.

 

I make about $6K - $7K a month but since I have a business, I put a lot of money into my business.

 

 

Established Contributor
compassion101
Posts: 596
Registered: ‎06-06-2012
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Re: Which debt should I pay it off first? HELP!

I'm not touching the car at 3.9% unless it's because you want to get the debt out from yunder your Uncle. I'm also never paying the 0% before it's due.

 

TBH, I'd open a brokerage account and put the money in SPY and then withdraw it in June to pay off your CC.

 

 

 

 

 

 

Valued Contributor
takeshi74
Posts: 2,605
Registered: ‎06-05-2013
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Re: Which debt should I pay it off first? HELP!

[ Edited ]

Creditorated wrote:

I would definitely pay that credit card off completely before APR starts to kick in. My uncle doesn't really care about that loan, since I never missed any payment but it would be great if I don't have anything to pay monthyl other than my regular utilities.


Sure it would be.  However, paying that amount to one or the other or splitting it means that you still have payments no matter what you do.  If you want to reduce utilization, increase your credit score and avoid interest then paying off the card makes more sense to me.  If your auto loan doesn't penalize for prepayments you could apply the remainder to the car loan.  That said, it's your call to make.

 

Keep in mind that a lot of introductory offers will charge you interest from day one at the full rate if you don't pay off the balance before the introductory offer expires.  Double check your terms.

Frequent Contributor
Roarmeister
Posts: 330
Registered: ‎04-21-2012
0

Re: Which debt should I pay it off first? HELP!

If you need to have a higher score in the next couple of months, then pay down or completely the CC.  If you are not going to be seeking credit then just pay down debt that will have the highest interest attached to it.  Paying off debt should 1st - benefit you the most financially and your score is secondary to that requirement.  Your score is instanteously generated and good only for that moment - hence higher scores are only really necessary when you looking for more credit.  Otherwise, just do what will benefit you the most financially in the long run and the credit score will take of itself.  Credit score chasing just to get a better score is just plain silly, JMHO.  :smileyvery-happy:

 

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