Pay off student loan or credit card?

[frugalredhead]

For those of you who remember me, we have a TON of credit card debt that we are working diligently on paying ($4K paid off in 3 months - a great start!!) Below are the balances from the last time I posted about the debt (obviously they are a little lower now but that doesn't really affect my question).


Card Balance Interest Rate
BOA 22416 12.74
Chase 7600 12.24
Discover 11000 13.49
Cap 1 24320 7.9
Citibank 5676 6.99


I have a private student loan that I have about $2700 left on, at an interest rate of 4%. I'm trying to decide between leaving it alone, since the interest rate is much lower than my credit cards, or just going ahead and paying it off. Monthly payment is $54 a month, due to be paid off in about 4 years if I just pay the minimum. My regular income covers the minimums on all of these credit cards, plus some extra that I put towards the Chase card. All of my income from my 2nd job goes towards the Chase card. As I am progressing now, I will have that paid off at least by December, possibly sooner if I can pick up some more evening shifts at job #2.

My current plan is to pay the Chase, and then Discover, and then I'll go from there. I might pay off the Citibank after that because even though the interest rate is the lowest, I'll be so close to having it paid off I might just want to finish it off.

But anyway, do you think I should just keep paying that student loan as scheduled or go ahead and knock it out? It would take me about 3 months to pay it off. Thanks for any advice!

[klarose]

I'd leave the student loan alone until the credit card debt is gone.

If you really hate it, you can maybe just make the payment $75 or $100 instead of the $54. But I wouldn't contribute anymore than that until your high interest credit is paid off.

I have to ask. Is there a reason your paying off the Chase card before the Discover?

Good job on what you have accomplished so far!

[frugalredhead]

Thanks! Yes, I am paying off the Chase card first because my kids' daycare cost goes on that card, and at the time, I was so close to the limit that I was constantly having to worry about whether or not I had enough room for their daycare to go on it, asking my provider to delay the payment, etc. It was embarassing At this point, the balance on the Chase is about half of the Discover, and the difference in interest isn't huge so I'm just going to run with it and get it paid off!

[Bob B.]

My current plan is to pay the Chase, and then Discover, and then I'll go from there. I might pay off the Citibank after that because even though the interest rate is the lowest, I'll be so close to having it paid off I might just want to finish it off.

When I was paying off CC debt, I concentrated on highest APR, and sent minimum payments to everything else.

From a dollars and cents standpoint, paying off the student loan early, or or your Citibank after your Chase, and before other higher rate cards might not make *that* big of a difference.

But, I never trusted myself with the extra cash flow from paying off a smaller balance debt.

If I had paid off a smaller balance debt early, and had $50 extra cash flow, I never really trusted that that extra $50 would go to debt, and not other spending.

In may case, my highest APR debt was also by far and away my biggest CC debt. So, almost all of my smaller balance, smaller APR cards were paid off while I was still chipping away at the biggie.

[Weird Tolkienish Figure]

For those of you who remember me, we have a TON of credit card debt that we are working diligently on paying ($4K paid off in 3 months - a great start!!) Below are the balances from the last time I posted about the debt (obviously they are a little lower now but that doesn't really affect my question).


Card Balance Interest Rate
BOA 22416 12.74
Chase 7600 12.24
Discover 11000 13.49
Cap 1 24320 7.9
Citibank 5676 6.99


I have a private student loan that I have about $2700 left on, at an interest rate of 4%. I'm trying to decide between leaving it alone, since the interest rate is much lower than my credit cards, or just going ahead and paying it off. Monthly payment is $54 a month, due to be paid off in about 4 years if I just pay the minimum. My regular income covers the minimums on all of these credit cards, plus some extra that I put towards the Chase card. All of my income from my 2nd job goes towards the Chase card. As I am progressing now, I will have that paid off at least by December, possibly sooner if I can pick up some more evening shifts at job #2.

My current plan is to pay the Chase, and then Discover, and then I'll go from there. I might pay off the Citibank after that because even though the interest rate is the lowest, I'll be so close to having it paid off I might just want to finish it off.

But anyway, do you think I should just keep paying that student loan as scheduled or go ahead and knock it out? It would take me about 3 months to pay it off. Thanks for any advice!

Have you tried to apply for a no APR card? I moved my balance to one, it will make paying it off much much easier, and more money in your pocket.

[ramseyfollower]

That is a TON of cc debt.... If you realistically don't see yourself paying off those credit cards then the best option is to pay down/off your student loans. I am going to get bashed for this, but take it for what it is, THE TRUTH!

If you declare bankruptcy student loans are the only thing that will always stay with you. They do not forgive those loans. So in a worst case scenario why pay down on debt that is going to get wiped away anyhow?

On a moral note.... You should pay off all your debt and CC debt is the worst debt to have.

[Singuy]

That is a TON of cc debt.... If you realistically don't see yourself paying off those credit cards then the best option is to pay down/off your student loans. I am going to get bashed for this, but take it for what it is, THE TRUTH!

If you declare bankruptcy student loans are the only thing that will always stay with you. They do not forgive those loans. So in a worst case scenario why pay down on debt that is going to get wiped away anyhow?

On a moral note.... You should pay off all your debt and CC debt is the worst debt to have.

Haha, I was thinking the same thing. Morally wrong, but definitely the most advantages move. Pay off school debt, declare bankrupcy, live with parents for 10 years, pay cash for house/car with money you save.

You'll have crap credit, but the banks get the least amount of your money.
On the flip side, you just took a dump on everyone else who are trying to pay off their debt. The more people who takes advantage the system, the higher the interest rate on CCs(due to increase in risk).

So in conclusion, if you don't want to be a jerk, pay off the highest interest rate CC first, then never use a CC ever again.

[frugalredhead]

Don't worry guys, no thoughts of declaring bankruptcy here! My husband and I make very good salaries ($150K combined) and we have the means to have all of the credit card debt paid off in 4 years. We just needed that big wake up call to show us how irresponsible we've been with our money. I will leave the student loan alone for now and focus on the credit cards. By the time they are paid off, the student loan will be paid off too and then the only student loans I'll have left is my federal loan (at an interest rate of 1.88%, so in no huge rush on that one!)

I have applied for a 0% APR card, but only got approved for $900 (due to my high credit utilization). I transferred some of the Chase card to that and will make sure it is paid off before the promo rate is up (12 months from now). I am hoping that as I get these cards paid off, I will get good balance transfer offers on the paid off ones.