Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Paying Your Bills
Profile Image

Question By
Buma

0 Contributions
0 People Helped
What debt to pay down?
I'm going to be getting a large cash gift from my mom (tax free). Would it be better to pay off my personal loan or pay down credit card debt?

The personal loan is 13.74% with a monthly payment of $386.30. My credit cards are mostly 0% offers with the remaining balance on a 1.9% offer.

I know paying down the credit cards will improve my utilization, and therefore my credit score. And it will reduce my monthly expenses on the payments, but not as much as paying off the loan.

My feeling is that paying off the loan, with the high interest and larger monthly payment, is the way to go. But how does paying off the loan early affect my credit score?

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
5 Contributions
3 People Helped

I would recommend paying off any credit cards that after the 0% interest promotion is higher than the personal loan.  Direct any remaining money at the personal loan, but then take the money you have been paying on the credit cards and apply that money to the personal loan each month.

You will also need to check to make sure that there is no penalty for early repayment on the personal loan, as some loans do have early payoff penalties.  If the loan does have a payoff penalty, then direct funds at credit card debt and then put the rest into an emergency fund.

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.