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About LinkBacksWould you pay off a 5500 dollar car loan or a 9k credit card first? Interest on car is 5 percent and interest on card is 9.5% fixed. Please give your reason as well.
Thread: Car Loan or credit card?
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Centurion Member
- Join Date
- Jun 2011
- Location
- Down South
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Car Loan or credit card?
Cards
Visa: BofA Cash rewards Visa Signature (1% on everything)
Kroger 123 Rewards Visa, Ascend FCU Platinum Visa (1% back), Penfed Platinum Cash Rewards Visa (5% on Gas)
BofA Cash Reward Platinum Plus (1% on everything, 2%on groceries, 3% on gas), Penfed Platinum Rewards Visa ( 5 points on gas, 3 points on groceries, 1 point on everything else)
Discover: Discover More (5% back rotating categories), Discover Miles (2% on travel and restaurants, double miles on phone, internet, and tv
Amex: Gold Card, BofA Accelerated Cash Rewards (1.5% on everything)
Express Store card (points for gift certificates and special deals)
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Centurion Member
- Join Date
- Jul 2011
- Location
- Houston
- Posts
- 106
If I could pay one of them off completely at one time (current level to $0) I would pay of the high interest loan first. Paying off the credit card will save you interest (higher balance+higher interest rate should be a good chunk of change) and free up credit for future use (if card is still open).
If you are thinking about accelerated payments (paying the max you can every month until both are paid off). I would look to knock out the lower one first. After it is paid off I would "roll" all the money I am paying out to the other one. This is the approach advocated by Dave Ramsey. It keeps you spending flat while attacking your debt. It also leads to his "feel good effect". You see the bills falling away and it reinforces your commitment to you to "keep it up". Problem is you will spend more on interest. However it is still a plan that is measurable (which really means it can be tracked).
Hope that helps.
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