What should I pay off first? credit card or 401k?


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Most Helpful Girl

  • is there a matching component from your company? If sp, that's free money and will need to be factored in. But, It usually makes most sense to pay off debt first unless you have a special low or no interests rate and have a guaranteed return on the 401k. mark in your cakendar when the special or zero rate ends so as to not start being charged their normal rates which can be as high as 30%!

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Most Helpful Guy

  • I take it you have a loan from your 401k. And credit card debt.
    My suggestion is pay off the credit card first because you paying interest to someone else. when interest you pay to the 401k actually goes to you. so the faster you pay off the credit card the more money you save and adding extra to your retirement account so in the long run its a win win

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What Girls Said 3

  • This is an intelligence test, right? LOL

    I mean, depending on the card's APR and yr ability to pay back the debt, it might even make economic sense to take a penalty withdrawal from the 401k to pay off the card. (The penalty is only 10 percent, over and above normal income taxes... if yr making minimum payments on a 24.99% APR card, this is a no-brainer even though yr grandmother would frown at you).

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  • Credit card.

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What Guys Said 3

  • credit card

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  • Pay your debt off first. The interest rate is much higher than the rate of return on a 401(k).

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  • You provided no details, like the interest rate on the credit card, the amount owed to both, the expected return on investment on the 401k and any tax benefit to adding to the 401k. I presumed you borrowed from the 401k?

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    • Yea my card 9.96% Apr.. I pay the same a month about

    • Well, that's one part of the information. Still not enough to give you the advice you seek. If your credit is good enough, you could apply for one of numerous credit cards that offer zero percent interest on purchases and credit card balance transfers for 12-21 months, depending on the card. You will likely have to pay a transfer fee of usually 3% of the balance transfer amount. It's still better than almost 10% interest, presuming you can pay the card off within the zero percent period.

    • I got a lump sum no payments

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