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With credit card debt and student loans plaguing your credit and your life, it can be tough to decide which one to pay first. You could spend much longer paying a little on both, or work towards paying one off so you can focus on the other. What debt should be paid first? That’s a question that can really be confusing.

Credit Cards

A credit card is given to you from a bank that considers you responsible enough to make payments on what is owed. Depending on your balance, your issuing credit card will allow you to make purchases and pay them back at a later date. There’s often a grace period of a month when you can pay back the money without accruing any interest. After that month, interest is being added to the principle amount you borrowed. Interest can be quite high with some banks or credit card companies.

Personal Loan

A personal loan is what you took out when you secured a student loan. It was a lump sum of money that was given to you by a lender and sent to the school to pay for your education. This is an unsecured loan that didn’t require any collateral for repayment. Normally, you’ll have to make fixed payments on a monthly basis once school is over, and you’ve obtained your degree.

While you have to pay both of them without missing any payments, one of these debts should be paid down first. Otherwise, you’ll spend money to pay the minimum balance but never touch the premium, which will stay the same.

High Credit Card Interest

When it comes time to make aggressive payments on one of these debts, you’ll want to resolve the credit card debt first. Never ignore the student loan debt to make more payments on the credit card, but if there’s extra money, it should be applied to the credit card. It’ll save you money on interest when you can pay the credit card. Any card with a high interest rate should be paid prior to student loans.

Impact on Credit Score

Along with the paying the one with higher interest rate, you’ll want to pay the one that will have the biggest impact on credit score. When you have a low balance versus the amount you could possibly have, it factors into your credit score. For example, if you have a credit line of $1,000 but only have $50 on the card, you’ll have a higher score than someone who is maxed out at the top amount of $1,000. It’s called the credit utilization ratio. A lower balance is always better for your credit score.

How Does That Influence Future Loans?

When you have a good credit score, it’ll help you in the future when you want to obtain a loan. While you can pay off your student loans for years, it’ll have less of an impact on your score as long as you pay it on time each month. Creditors will be able to see if you’ve paid credit cards down as soon as possible, which isn’t likely to be possible for a large student loan anyway.

Consolidating Credit Cards

You should never ignore your debt when trying to pay down one account. Always make the minimum payment on each card as well as your student loans. If you have more than one credit card, and it’s confusing when making payments, you can consolidate all your cards into one balance transfer card. With that, you’ll make one large payment each month that covers them all.

Minimum Automatic Payments

If you have the ability to make automatic payments from your savings or checking account, you should consider doing this to stop yourself from missing payments. To pay down the debt, you might have the company automatically take out extra each month. Eventually, it’ll cause the balance to be reduced with each payment.

It can be tough to pay down debt when you have credit card as well as student loans due each month, but even a few dollars extra on your credit card can make a huge difference over time. To help boost your credit score, work towards paying down the credit debt.