![]() Once you've wiped your Visa slate clean, however, and still have low-rate car, home and student loans, you may find it better to invest any extra money you have than to retire your remaining debt at a faster than required pace. With credit-card rates averaging 13.8 percent recently, it's tough to beat the return on paying off your plastic. You also get the psychological boost of crossing a bill off your repayment list. That way, you're no longer making nuisance payments each month for cards you don't really use, and you free up cash that you can use to pay other debts, says Edina, Minn. If you have cards with small balances (hundreds, not thousands of dollars), consider paying them off in full. The closer you are to your limits, the greater the perceived risk that you will not pay on time. This will improve your "utilization ratio," a number that tells lenders how much of your available borrowing power you've tapped and accounts for 30 percent of your score. Your best bet: Pay the cards with the biggest balances relative to your credit limit first rather than the ones with the highest rates. So it's typically in your interest to pay off debts in that order.Ĭhoose which cards to pay first in a way that will help raise your credit score. To help prioritize, consider these factors.Ĭredit cards are generally more expensive than car loans, which are pricier than tax-deductible mortgages, which in turn cost more than deductible student loans. The dilemma is a common one for families struggling to repay a variety of loans: Should you pay your credit cards first, and in what order, or are you better off putting extra money toward, say, your mortgage or car loan? Or would it be even smarter to put extra cash into savings? But figuring out which loans to tackle first is a conundrum in itself.Īs Audrey says, "I feel like I'm just spinning, not sure where my money will make the biggest difference." Paying off their debts is, rightly, the Dyjaks' top financial priority. Says Audrey, "I am financially drowning and emotionally drained." couple earn a healthy $95,000 a year, their hefty debt load is straining both their budget and their marriage as they argue about how to get their finances back on track. NEW YORK (MONEY Magazine) - Like many baby-boomer couples raised in an era of easy credit, Tom and Audrey Dyjak have managed to charge themselves into a black hole of debt.Īudrey, a nurse, and Tom, a horticulturist, have four credit cards with a combined balance of about $12,000 and two home-equity lines of credit totaling about $70,000 (used to consolidate higher-rate debt), as well as a $120,000 mortgage.Īlthough the Ludlow, Mass.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |