Many people face this dilemma right after they graduate: what should they pay back first? It is often required that payments on student loans be made roughly six months after the completion of school. Sometimes a person has the opportunity and financial wherewithal to pay either their credit cards or their student loans in their entirety. It is advisable that credit cards get paid off first as they often have higher interest rates than loans.

There are many types of student loans out there, but it is always important to be aware of how much you owe in student loans. The interest rates for federal loans are relatively low and there are cases where payments can be deferred for a certain amount of time. This gives this type of debt more leniency for repayment. It is not like that for credit cards, and if you miss a payment or two, your interest could jump to a very high rate.

If you were to prioritize, your best bet in most cases would be to eliminate credit card debt, especially if the interest rates are higher than with your student loans. Once the credit card debt is eliminated, you can slowly pay off your student loans as most of those interest rates are locked in. And in some cases, these loans will be paid off by motivated employers looking for someone with your qualifications.

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