Credit Card Debt - Need help?
Take out a federal student subsidized loan to pay the balances off and make life less stressful right now and worry about it later
Take out the student loan.
Many people hate the idea of long-term indebtedness, but federal student loans cannot be beat.
Interest rates are slightly higher now than they were a few years ago, but you can get a federal student loan at 7.22%. There is NO credit card that will give you that rate unless you have a long credit history, high income, and a stellar score.
Other drawbacks to credit cards vs. student loans, you can’t call them when you aren’t making a lot of money (between jobs) and get a deferment. You also can’t call them to get a deferment if you’re unemployed. You also can’t defer accrual of credit card interest if you go back to school.
Many people hate debt. Not all debt is bad debt. Credit card debt is extremely bad debt to carry, but banks necessitate us doing it by making every living process contingent on credit because ultimately they make money off of it. Even at 16% interest, the $1 you purchase today in car repair will cost you $1.16 next year as opposed to $1.07 in student debt. And, when you’re done with school, you can consolidate even one federal student loan for an even lower interest rate.
Paying credit card minimums is just not smart. They are calculated not to be paid off for 35+ years. Opening more credit cards? You should only have 2-3 cards. You shouldn’t open a lot of accounts, and you shouldn’t close active accounts if you want to maintain a good credit score, with what I imagine is not a lot of income.
If you decide to go student loan, make absolutely certain you get it from the FEDERAL Govt through Direct Loan Servicing Program and not from a Private bank that manages student loans.
