The return of federal student loan payments in October has the potential to derail your finances, especially if you’re already struggling with credit card payments.
Start by writing down where your money is going, says Kristen Holt, CEO at GreenPath, a nonprofit credit counseling agency. Next, determine whether you’ll be laser focused on student loan or credit card debt. Keep up with all payments, but put more money toward the high interest debt to make more progress. Credit cards typically have higher interest rates unless new terms are applied through an agreement or promotional offer.A good credit score of 690 or higher can qualify you for low-interest offers. A, for instance, lets you move debt from a different account onto the card to get a lower interest rate.
If you’re already on an income-driven repayment plan, Earwood suggests comparing options in case a different one makes sense for your goals. For instance, those who have undergraduate loans may want to switch to the new SAVE plan because it could cut their payments in half starting in July 2024, and forgive remaining debt more quickly if they have a smaller principal balance.