Sallie Mae, Gingham Pinafore, Pernicious Credit Cards: An Update

So yesterday's post about credit card debt vs. student loan debt was probably one of the least scintillating things I've ever written about. But it's a major source of stress and financial outlay for trillions of people, so I took my theory to my financial analyst and he had a surprising response.

Sounds counterintuitive, but pay down your credit card first, as credit card debt is seen as "bad debt" in building your credit score, and long-term debt that is serviced on time is good.

Which would refute my theory that I should pay down my interest-accruing student loans before my non-interest-accruing credit card debt. I had suspected this might be the case. Credit cards are evil. Student loans are good. Even if they cost you more in the long run.

Which is why it would be batshit crazy to pay off student loans with a 0% credit card. You wouldn't pay interest, but you would look like a credit risk to anyone interested in giving you credit (that means mortgage officers, loan officials of any stripe). A long-term loan that's paid off slowly and steadily, like a student loan, doesn't look as bad as a credit card balance. So forget what I said. I'm back to attacking the credit card debt. And you should too.

Comments/advice welcome.

finance, financeMelissa Kirsch