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| *Ostroff, Fair and Company>>>Personal Finance |
Would it be better to pay off my car or put towards high interest rate credit cards? |
I just got a loan with a lower interest rate to consolidate some debt... but now I'm wondering if I should just pay off my car with it which has the same interest rate and free up $300 month which I can apply towards my high interest rate credit card debt. Or should I just apply it to my credit card debt and continue making car payments for another six months? Presumably your credit card rates are higher than your car loan rate. If so, pay off the credit cards. Then, because you had to get a loan to do this, and you have high rate cards, knock down the limit on some and get rid of all but the best two. Your loan, while a lower rate, is likely longer than six months. If you use it to pay off your car, you could end up actually paying more interest than just paying off your car normally over the next six months. Finally, if you do decide to pay off your car first, don't get a new one until the credit cards are paid off. That's your trade-off and a promise you need to make to yourself. High interest credit cards , need to make them go away first.. It would make sense to pay off the higher interest cards. You could then get a lower interest rate loan, pay off your car, and have one payment. Later on, you may find a lower interest loan, and follow the same steps. Get rid of the high interest credit card debt first. As long as you make the payments on your car, you will be fine. Your credit score will improve as you have a less debt to credit limit ratio. always pay off the accounts with the highest interest rate first, then work on the rest and then don't run up the debt again! Get rid of the high interest credit cards! pay off the car.... cause if yo upay down your credit cards... I guarentee you will just bring the credit card debt right back up, fast... and then you still have to pay off the car.. this way you pay off the car,,, and you already konw, you can't use your card much anymore...... |
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