Student Loans vs. Credit Cards | Which One to Pay First

Student loans can take much of what’s in every student or graduate’s wallet.

However, it isn’t the only thing that needs to be paid.

The credit card is on top of the “to-pay” list, too.

So the dilemma now lies on which one to pay first.

Coming up with a decision is difficult but the following ideas might help you decide once and for all.

Student Loan or Credit Card? Which Should I Pay First?

Student Loans

Let’s break down what comprises a student loan, the extent of its gravity on your finances, its advantages as well as repayment strategies.

1. Interest rates are lower.

Interest rates for student loans are usually lower, falling within a single digit. This is low in comparison to credit card interest rates.

2. It’s tax-deductible.

The government considers student loans as an investment so no tax deductions are made.

3. Student loan type may qualify for forgiveness.

This will entitle your debt for cancellation or total forgiveness. The other option is that you’ll only pay a certain portion.

4. Assistance for loan repayment as offered by the employer.

You can always verify with HR what your options are when it comes to this or if they have an existing loan assistance program. You might also look into this option in your job hunt in the future.

Repayment Strategies for Student Loans

1. Consider auto-debit payments for your student loan.

2. Pay in excess or pay the minimum consistently until they are completely paid-off.

3. Go for the option of zero-interest credit if it is offered.

Credit Cards

Credit card debt can be tough to pay off as a student loan.

Let’s identify what comes with credit card debt and how you can settle it with repayment strategies.

1. Managing and maintaining a good credit score.

The moment you swipe a credit card, it automatically registers a payment due right away. The credit card issuers then send your payment history to companies in charge of credit reporting. Boost your credit score by paying the balance in full each month.

2. Higher interest rates compared to student loans.

Using a credit card to pay tuition fees and other school expenses can help you in funding even more than laptops, books, etc. However, you should review this option first due to higher interest rates.

RELATED: HOW TO GET OUT OF CREDIT CARD DEBT

Repayment Options for Credit Card Debts

1. Avoid late payments.

2. Have a good payment history.

3. Pay credit card debts near the credit card limit.

Here’s a video from CNBC about a couple’s advice in paying off student loans and money saving tips:

These are just some of the ways to get out of debt; may it be from student loans or credit cards.

Your decision on which one to pay first will vary depending on your current lifestyle as well as the monthly budget you have allot for payments.

In addition, remember that it’s always better to monitor your debts and keep it to a minimum so you can start saving.

A personal payment plan may be necessary to make sure you are not missing out on any single debt.

Do you have other money-saving tips and payment options to recommend? Share your thoughts in the comments section below.

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