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| *Loan,banking and credit>>>mortgage loan |
Which is better to pay off car loans, credit card or put money toward mortgage.? |
My husband and I have two car loans one at 4,800 at 4.9% the other at 14,400 at 6.15% and a credit card at 10,700 at 7.9% but we also have a mortgage. What I鈥檓 planning on doing is having my husband sign up for another credit card because the current offer is no interest till 2008 (including balance transfers, there is a fee but the max fee is about how much we pay for the finance charge in one month. What I don鈥檛 know is if I should put our tax refund toward bringing down the lower car loan so the 230 we put toward that every month can go to something else sooner or if I should put some toward the car and some toward the mortgage each month. We don鈥檛 know if it鈥檚 better to pay the min on the mortgage and put more toward the other loans or put a little toward the mortgage and one of the other loans. And yes while doing all this I do put a little towards savings each paycheck. Forgive me for rambling but I wanted to be as detailed as possible. Thanks! Pick the credit card with the highest balance and pay it off. Then go to the next one and pay it off -then the next. After that go to the car loans....start with the car loan with the highest balance and pay it off. Even if the interest is higher on a card with a lower balance you are still paying more because its compounded on the total balance. Pay the one that is most costly first....but do it by increasing your income. Start a home-based business. Other things being equal, you should pay down whatever carries the highest interest rate. In your case, the credit card is the most likely suspect. Credit card first. Then cars. Then mortgage. Although it's nice to have a home paid off, you need your mortgage interest for a tax write-off. What will be the interest rate on the new card in 2008? Will you be able to pay off the balance before it kicks in? Generally, the best thing to do is pay off the one with the highest interest rate first. 1. Lets address the question of transferring your credit card balance. First you should be aware that when you transfer the balance from the current credit card, it is highly likely that the transfer will trigger a change in the interest rate on that card. It will very likely go to 18%, so that card will be of no value after that. You should make sure that the rate on the new credit card will not be so high that the 9 months of interest saved will be worth it. And make sure that they mean that they will not CHARGE you any interest until 2008. Usually what they do is when they do bill you in 2008 they will actually bill you for all of the interest that would have been accrued during 2007. So you end up worse off than you would have otherwise been. So you will be destroying a good credit card relationship and buying into another credit card relationship which may not be as good in the long run. Ever heard of out of the frying pan into the fire? Think it thru beyond 2008. 2. I would suggest that you do the following, consolidate your three debts into one home equity loan. Go to your bank where your mortgage is held and figure out what interest rate you would be paying, what fees would be charged and what your monthly payment would be if you consolidated the three debts totaling $29,900 into a single home equity loan. Take the home equity loan and pay off all three of these debts. The interest you pay on the home equity loan is tax deductible and so your after tax rate will probably be much less than you are currently paying on the three debts which you are currently paying with after-tax dollars. 3. As for your tax refund, use it to pay down the credit card debt. Good luck. if you got a 7.9% apr on a credit card KEEP IT but pay that one off first. |
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