July 18, 2024
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THE MONEY MINDER

‘I could use this and get rid of the credit card debt completely’: I have a $30,000 annuity check coming and multiple credit cards with high interest. How should I tackle my debt?

‘I could use this and get rid of the credit card debt completely’: I have a ,000 annuity check coming and multiple credit cards with high interest. How should I tackle my debt?

Hi Money Minder,

I’ve got some credit card debt and need to make a decision about what to do with a $30,000 annuity check coming my way at the end of August. Do I wipe out the debt completely, put some towards it, and save/invest the rest?

I’ve been approved for a personal loan to pay off high-interest credit cards, here are the loan details:
– $26,000 at 17.76% for 60 months
– Minimum payment $658.95

My debt breakdown is as follows:
– CC1: $15,157.91 at 28.24%
– CC2: $10,426.34 total with different rates
– CC3: $4,703.75 at 0% until 1/1/25
– CC4: $1,505 at 0% until 7/22/25
– CC5: $3,875.99 at 0% until 12/1/25
– Personal Loan: $17,171.06 at 14.48%

What do you think Money Minder? I’ve been making payments of $500-$1000 a month towards CC1.

Thanks for your help!
Financially Confused

Response from THE MONEY MINDER:
Hello There,

Congratulations on having a plan to tackle your credit card debt head-on. It’s a tough situation to be in, but it’s great that you have a significant amount coming in soon that can help make a dent in your debt. Given the high-interest rates on your credit cards, it would be wise to prioritize paying off those balances as much as possible.

In your case, it seems like using the $30,000 annuity check to eliminate the credit card debt completely would be the most practical approach. By paying off the high-interest credit card balances with the $30,000, you would save a significant amount of money in interest payments in the long run. This would also free up the money you’ve been putting towards CC1 each month to potentially start building up savings or investing for your future.

As for the personal loan you were approved for, it might be better to hold off on funding it at this time since the interest rate on the loan is higher than some of your credit card debts. By using the annuity check to pay off your credit card debt, you can avoid taking on more debt and focus on improving your financial situation.

Remember, it’s important to continue managing your finances responsibly after paying off the credit card debt. Setting up a budget, building an emergency fund, and exploring investment opportunities can help you secure your financial future. Best of luck with your financial journey!

Farewell from THE MONEY MINDER

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