Student Loan - Loans and Debt Consolidation

PAY STUDENT LOANS VS CREDIT CARDS HIGHEST INTEREST RATE LOAN FIRST SUBPRIME BLOGGER BLOG

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Pay Student Loans Vs. Credit Cards- Highest Interest Rate Loan First?

When deciding which to pay first, a student loan or a credit card- one should always opt to pay the higher interest rate loan first which 9 times out of 10 will be the credit card. Paying off the higher interest rate loan first is always the best decision for several reasons.

Credit cards have many penalties like late fees and interest rate increases for missed or failed payments. If you miss one payment your interest rate may double and you will be charged a late fee on top of that. This means the balance on your card is just going to increase more and more due to one missed payment.

With student loans there is no late fee and no interest increase for a missed payment. Since these loans are through the government they want you to successfully pay them off not be penalized for failing to pay them. Therefore, it is always the best option to pay the credit card before the student loan.

Author: Sylvia Wayne

3 Responses to Pay Student Loans Vs. Credit Cards- Highest Interest Rate Loan First?

Cicily March 9th, 2010 @ 11:16 am

Just a note that late fees are charged on both federal and private student loans. Your advice about paying the credit cards first is likely sound, but consumers need to ensure that all debts are paid timely to avoid high late fees and negative credit reports. Thank you!!

Kevin March 10th, 2010 @ 3:37 pm

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