Adam McCann, Financial Writer
@adam_mccann
You should pay off a credit card first, before a student loan, in most cases. Credit card debt tends to be far more expensive than student loan debt. Federal student loan APRs range from around 5% to 7%, and private student loan APRs range from around 4% to 13%, according to the credit bureau Experian. So even the most expensive private student loans are cheaper than the average credit card – existing credit card accounts have an average APR of close to 15%, while new offers have an average around 18%.
Debt Cost: Consider Interest Rates
The simple reason why you should pay off your credit card first is that you will likely accrue more interest charges over the same amount of time with your credit card than with your student loan. Paying down the debt with the highest interest rate first ensures that you have the quickest, least-expensive possible path to getting debt-free. Of course, if you happen to be the rare case with a student loan APR that’s higher than your credit card APR, you should focus on the student loan. Both credit cards and student loans usually have daily compounding interest. That means each day you owe interest on not just the principal debt, but also on all previous interest.
Even though it’s good to focus on the debt with the costliest interest first, it’s important to stay current with all debts. You shouldn’t forego a payment on the less expensive debt just to pay more on the more expensive debt. Missed payments will damage your credit score and likely lead to costly fees.
Other Ways To Pay Off Debt
One alternative way to lessen your debt load is to refinance some or all of your debt by moving it to a 0% balance transfer credit card (if you have at least good credit). Another is to take out a personal loan with a lower interest rate.
For balance transfer credit cards, you’ll want to make sure you can pay off the full loan amount before the 0% period expires, as these cards tend to have high regular APRs. There are often balance transfer fees in exchange for longer 0% introductory periods. You can use WalletHub’s free balance transfer calculator to see which card will save you the most money. And it’s only worth consolidating all of your debt in a personal loan if you can get an APR that is a lot lower than the APRs on both your credit card and your student loan. In both cases, balance transfer card and personal loan, you’ll need to make sure your credit limit or loan size can accommodate your existing debts.
You should also look into whether you’re eligible for student loan forgiveness. If you work for the government or a non-profit, you may be eligible for Public Student Loan Forgiveness after about 10 years of payments (120 qualifying monthly payments). Otherwise, people with federal student loans may be eligible for forgiveness after 20 - 25 years, based on their income.

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