This Thursday I popped by the Good Money set at ABC to answer your pressing financial questions from paying down car loans to dealing with low-performing 529 plans.

I’ve now got the link so that in case you missed it, you can watch at your convenience here. Additionally I’ve written my answers below.

Thanks to all who wrote in and I hope you’ll continue sending me your terrific questions.

Richard from Boston asks:

I have a 780 credit score and I have some cash in my checking account that is earning a meager .01%. Should I pay off my 5k car loan outright which has a 3.9% APR (which is a low rate historically)? Would paying the car loan early affect my credit score in the long run?

Richard, the fact is you won’t really see a boost in your credit score just for paying down your car loan early. A car loan is an installment loan. It’s a contract between you and the lender saying you will pay a certain amount periodically for an agreed upon duration. For car loans that’s typically 3 to 4 years. The better news is that by paying down the car loan outright Richard may end up saving a little bit of money because he won’t have to pay those extra years of interest and fees. Just make sure that that $5,000 isn’t his entire life savings. The interest rate on the loan isn’t that high where I’d sacrifice my entire savings to pay down the car loan.

As for your meager .01% savings – you can do a lot better than that by either putting that money in a CD or in an online checking account where you can find rates as high as 2%. You can compare rates at www.bankrate.com.

Shane from Bellevue, Washington asks:

As a first time home buyer when I get my tax credit or tax return what is the best decision I can make. Should I invest, payoff debt or put it towards my mortgage to pay down quicker.

This really depends on how well you have your bases covered. First establish zero credit card debt. If that’s a problem area then use your tax return for that. Next establish at least 6 months savings. Once debt and savings are taken care of putting an extra principal installment on a 30-year mortgage is a fantastic investment. It could knock down the term of the loan by as much five years.

Teri from New York asks:

I just looked at our New York State college savings plan performance for the past 7 years: It’s earned .07 percent. Should we be saving differently for our daughter’s college education, ETA 7 years from now?

  Yikes – that’s really low. Keep in mind that your family has another 7 years to go and you may see an uptick in the 529 portfolio. Wishful thinking? Well, if you’re skeptical, know that you are able to roll-over your 529 plan into a new 529 plan (either a different NYS plan or an out-of-state 529) with a better track record. The IRS lets you roll-over once every 12 months.

Or, better yet, find out what your current 529 plan is invested in. Maybe you need to adjust the allocations to be more aggressive. With 7 years left you do have a relatively long horizon and can afford to take some extra risks. With four or five years left to go, that’s when I’d adjust the portfolio towards a more conservative approach. You can adjust your 529 plan’s investment allocations once a year. That may be a better place to begin.

For added help, www.savingforcollege.com is a great resource for researching different 529 plans. If you opened this account through a broker definitely get him/her to pull up past performances of other 529 plans that my have brighter outlooks.

Brian from Long Island, New York asks:

Is it a good idea to transfer my existing credit card debt onto a different credit card offering 0% APR for the first 12 months?

Yes – but only if you are committed to paying down that debt within 12 months or less. The benefit of transferring a balance to a zero interest card is that you’re just going to deal with the balance that you have and that’s it. No interest. Find out your balance, divide by 12 and if you don’t have the ability to come up with that money every month don’t bother because more likely than not that 0% APR is a teaser rate and the card company has the right to jack up that right after a year to a rate that may be much higher than what’s on your credit card. There may also be a transfer fee, usually around 3%, associated with some of these deals. So just make sure that over time this is the cheaper alternative.

And a parting tip – after transferring the debt, don’t close your other credit card account, especially if you’ve had this card for a long time and if it’s a card with a high credit allowance. All of those things are good for your credit score. Still use that card to buy one thing a month to keep it active so that the card company doesn’t turn around and close the account for inactivity.