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I have $31,000 in credit card debt at 3.9% for the life of the loan, and I am having the payments automatically deducted from my checking account so that I am never late and never lose the great interest rate. I have a remaining mortgage of about $136,000 at 5.63% for the next 4 years, after which it varies. I am recently unemployed, and with no job and lots of credit card debt, I am not a good candiate for refinancing my home for a lower fixed rate.

Given that, when I have extra money, is it better to pay down the credit cards (because credit card debt looks worse to a bank than a mortgage), or is it better to pay down the mortgage (because the interest rate is higher and it will surely increase after my fixed period ends)? The final consideration is that if I pay down the credit card debt fastest, then there will be one less bill to pay per month and that will happen sooner than if I attack the mortgage. During times of unemployment, monthly outlay can outweigh other factors.


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