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I have about $10K remaining in student debt with Sallie Mae at about 4% interest. My question is, which of the following should I do:
A) Pay off the remaining debt using a new airline mileage credit card (SM says I can for this amount), which would immediately grant me the equivalent of an airline ticket or about $400. I fly internationally often and plan to get this credit card anyway for that reason for the miles. I would IMMEDIATELY be paying off the full balance on the credit card. If anyone cares, it would specifically be the Chase Sapphire Preferred.
B) Continue paying the minimum on the student loan (about $90 per month) which would rack up about an additional $1.5K in interest over the next 10 years, but meanwhile put the $10K I would have used to pay it off into investments (undecided, likely a blue chip stock like Exxon or somesuch). I have also heard that it's sometimes better to hold onto a student loan if the balance is low because it improves your credit score, though I'm not sure if this is accurate.
Other info: Don't worry about rainy-day savings, retirement funds, other debt etc. I have built up significant savings, have no other debt, consistently max out retirement contributions, already have investments, have budgeted for future (kids, house, parent care, unexpected illness), high credit score, good insurance, extremely stable and well-paying job, etc etc. I just want some opinions on whether it's better to pay off the loan and get some credit card usage bonuses, or hold onto the loan and invest. Thanks!
A) Pay off the remaining debt using a new airline mileage credit card (SM says I can for this amount), which would immediately grant me the equivalent of an airline ticket or about $400. I fly internationally often and plan to get this credit card anyway for that reason for the miles. I would IMMEDIATELY be paying off the full balance on the credit card. If anyone cares, it would specifically be the Chase Sapphire Preferred.
B) Continue paying the minimum on the student loan (about $90 per month) which would rack up about an additional $1.5K in interest over the next 10 years, but meanwhile put the $10K I would have used to pay it off into investments (undecided, likely a blue chip stock like Exxon or somesuch). I have also heard that it's sometimes better to hold onto a student loan if the balance is low because it improves your credit score, though I'm not sure if this is accurate.
Other info: Don't worry about rainy-day savings, retirement funds, other debt etc. I have built up significant savings, have no other debt, consistently max out retirement contributions, already have investments, have budgeted for future (kids, house, parent care, unexpected illness), high credit score, good insurance, extremely stable and well-paying job, etc etc. I just want some opinions on whether it's better to pay off the loan and get some credit card usage bonuses, or hold onto the loan and invest. Thanks!
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