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Question for the Money Doctors

Question submitted on Sep 25, 2013.

Question

I have three student loans for which the grace period ends in about 2 months. I have one credit card with accumulated debt, and the highest interest rate.

I have done my best to pay the interest accruing on my student loans. There is still a balance of unpaid interest that will capitalize in 2 months. Should I put more finances toward the loan interest or my credit card debt.

Your help is appreciated. Thank you.

Answer

You don''t indicate the balance or the interest rate on any of the loans, including credit card debt.

One approach is to go ahead and pay off the higher interest credit card debt first. This certainly seems to be the most efficient way to get out of debt.

Another approach is to pay off the loans with the smaller balances first while making minimum payments on the other debt. Once the smaller balance is paid off, then pay whatever you were paying on that debt to the next smallest debt and so forth.

Good luck!


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