Are You A Student Who Needs Debt Relief Help? Get Help If You Are Drowning in debt

Are You A Student Who Needs Debt Relief Help? Get Help If You Are Drowning in debt

A common question asked by people looking for student debt relief help is "Should I pay off my credit cards or my student loans first?". This is a tricky question, and the answer depends upon a number of factors, including the rateon your credit card and your student debt andthe repayment terms

So lets look at a typical student debt help example. Let's say your credit card debt costs you 7.9% while your student loan costs perhaps 3%.

In that situation it makes sense to pay the minimum towards your student loan and put the rest of your money towards repaying your credit card debt. As long as the interest rate on your credit card debt is higher than on your student loan, focus on clearing your credit card debt first. Over the long run, that will reduce the total amount of interest that you have to pay on your debt.

But what if the situation changes?

What if the interest on your student debt starts to creep up, and you find an amazing credit card deal? What do you do if your credit card costs 2.9% while your student debt stands at 4.9%

Let's look at the advantages and disadvantages of the various student debt relief help options.

1) Focus on the credit card debt

Continue paying both debts individually, making the minimum payment to your student debt while putting the rest of your cash towards your credit card. Once the credit card is repaid, use all of your income to repay your student loan.

As long as the interest rate on your student loan is higher than your credit card, this option will cost you slightly more interest in the long run. But this remains the safest option. As you'll see below (option 4), it's generally much safer to owe money on a student loan than it is to owe money on a credit card.

2) Focus on both debts equally

Continue paying both debts individually, but focus on repaying both of them at an equal pace.

This is similar to option 1 above, the only difference being that it will cost you slightly less interest while the rate on the student loan is higher than the credit card debt.

3) Focus on the student debt

Continue paying both debts individually, making the minimum payment to your credit card while putting the rest of your cash towards your student loan.

This option is just the reverse of option 1, but takes advantage of the fact that in our new example the student debt suffers interest at a higher rate. It will help you to save money on interest payments for as long as the rate of interest on your student debt is higher than on your credit card deal.

But it will remove more of your debt from the relatively save environment of a student loan at the same time as leaving more of your debt at the mercy of the commercial lending sector (this isn't always the best option, as shown below).

4) Consolidate

Transfer the entire balance of your student loan to your credit card to take advantage of the lower rate. Using our new example, this would reduce the rate of interest on your student loan from 4.9% to the 2.9% offered by your credit card deal.

This could be a risky option for debt relief help. Okay, at present is might allow you to save a small amount of interest on your total debt, but you have to consider the differences between credit card companies and student loan providers.

Most student loan schemes are run by government agencies or educational authorities. This might sound hard to believe but outright profit is not their number one aim. And because many of these schemes are government subsidised, they often have extremely good repayment terms. Often far better than the best credit cards on the market. And they don't usually impose such harsh penalties if you are late with a repayment.

In contrast, credit card companies exist to make money. The more money that they can draw out of their customers the happier their shareholders. So before you transfer your student debt to a credit card, you must think long and hard about it, because it's a one time only decision. In most countries, once you've repaid a student loan, you can't re-borrow the money.

How long will this low rate of 2.9% on your credit card last? Is it just an introductory offer that will last a few months and then revert to a much high rate of interest? Are there any penalties or restrictions in the small print.

And what if you miss a repayment? Most credit card companies will charge you a hefty fee if make a late repayment. And as if that's not enough, some will even transfer your debt to a much higher rate of interest just because you miss a repayment. So if either of these things happen it would wipe out all your potential savings immediately. And there would be nothing that you could do about it.

Transfering student debt to a credit card could help you to save money but only if you make sure every payment is made on time and that you are committed to paying off the debt before the special offer interest rate ends. But it's a big risk and there's no way back if you run into problems.

If you find your debts are too much and you just cannot seem to get out of them then you are going to need professional debt relief help. This works by negotiating with your card lenders and reducing your debt. Click here for student debt relief help now.

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