Dad looking at mutual fund in newspaper

The average adult makes 35,000 decisions every day.1 Think about it. From the moment you wake up until you go to sleep, you make decisions about what to eat, what to wear, what to say … and whether to pay off your student loans first or your credit card bills.

Okay, so that last one may not be a decision you think about every day. But if you have student loans and credit-card debt, you know very well that figuring out how to pay off both involves a variety of choices — as well as several moving pieces to understand.

Your credit score is important.

Financial support can be hard to come by if you don’t have a solid credit score. And 35% of your credit score is based on your payment history. That’s why missed payments aren’t an option if you’re looking to secure low rates for your next high-dollar purchase.2 While you’re deciding which debt you’ll pay off first, make regular payments to both your student loans and credit cards. This can help maintain — and potentially improve — your credit score.

Speaking of your credit score, another 30% of it is based on your credit utilization ratio. The amounts you owe on your credit cards compared to your total credit limit determines this ratio.3 Student loans don’t factor into your credit utilization ratio because they’re considered “installment loans.” This means you owe a fixed amount, which you’re required to pay it off over a specified period, usually 10 years.4

Your credit card balances, though, are revolving debt. This means your balance can grow over time as you continue to make purchases. Making only minimum payments on high-balance cards will affect your credit utilization ratio, which can hurt your credit score. It can also make it harder to qualify for financial help.

Interest: cha-ching!

Student loan interest rates tend to be low — generally in the single digits.5 By comparison, average annual percentage rates for all credit cards in the United States was about 12.51% in 2016.6

Zero-interest credit options are also available. If you haven’t already done so, you may want to call your credit card company as soon as possible to ask for one. Be aware that the best way to avoid high-interest payments may be to pay off your credit cards altogether.

Also, keep in mind that interest paid on student debts is tax-deductible, which can help save you more money in the long run.7

The end in sight?

Depending on your spending habits, your credit card payments may never end. Your student loan payments, on the other hand, have a set payment schedule and end once you’ve paid them off.8 It may take a while to get there — but at least you know the amount you owe each month and can budget for it.

Other options.

Still having trouble deciding which debt to pay off first? It may help to know that both student loans and credit cards offer alternative payment options. As we said earlier, you can negotiate lower interest rates with your credit card companies or merge your debt onto one credit card.

Student loans generally offer extended repayment schedules if requested. Deferment is another option, which freezes your loan for a specified period.

We all make many decisions each day and some are certainly harder than others. When it comes to debt, deciding which kind to focus on can be difficult. Understand your options and you can make a plan to help improve your chance for greater financial freedom.


1 Hoomans, D. J. (2015, March 20). 35,000 Decisions: The Great Choices of Strategic Leaders. Leading Edge Journal. Retrieved April 30, 2017, from
2,3,5 Konsko, L. (2016, December 27). I Have Both Credit Card and Student Loan Debt. Which Should I Pay First? Retrieved April 24, 2017, from
4 Bidwell, A. (2014, October 07). Student Loan Expectations: Myth vs. Reality. U.S News & World Report. Retrieved April 30, 2017, from
6 Wu, J. (2017, March 29). Average Credit Card Interest Rates (APR) – 2017. Value Penguin. Retrieved April 30, 2017, from
7 Smith, C. (2017, January 05). Which Debt to Pay Off First? Student Loan Hero. Retrieved April 24, 2017, from
8 Rosenberg, E. (2017, January 05). Credit Card Debt Is Way Worse Than Student Loan Debt: Here’s Why. Student Loan Hero. Retrieved April 26, 2017, from