What cards to pay off to get my credit score up?

[Anonymous]

So i am in debt quite a bit. but good news is i just got my bonus check! I wanted to know should i pay off my two biggest credit cards that have debt or  the smallest ones. currently i owe chase 6.5k and discover  6k. and my lowest credit cards have a balance of: homedepot 1.2k and walmart mastercard $600.

please let me know what should be paid off first. thanks in advance.

[Anonymous]

What is the util% on each card?  And how much are you planning to pay?  It depends on the util and intrest rate.  I would pay off the lowest ones, and then use the remaining to cut both of those 6k cards in half.  It all depends on how much you want to spend to pay off debt and what those cards are costing you in intrest each month.  1-10% util on a card would be ideal for credit scores.

[1GaDawg85]

I would go for the ones with the highest interest rate

[heyarrnold]

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@1GaDawg85 wrote:

I would go for the ones with the highest interest rate

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+1

But TBH, I would do the math. Look at your balances and their interest. Although you may have a higher interest on one card, a card with a much higher balance and a lower interest may still cost you more monthly in interest.

[Anonymous]

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@Anonymous wrote:

So i am in debt quite a bit. but good news is i just got my bonus check! I wanted to know should i pay off my two biggest credit cards that have debt or  the smallest ones. currently i owe chase 6.5k and discover  6k. and my lowest credit cards have a balance of: homedepot 1.2k and walmart mastercard $600.

please let me know what should be paid off first. thanks in advance.

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Start with the walmart and the HD, then pay $1-2,000 on Discover and the rest to Chase.

[unrlmth]

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@heyarrnold wrote:

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@1GaDawg85 wrote:

I would go for the ones with the highest interest rate

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+1

But TBH, I would do the math. Look at your balances and their interest. Although you may have a higher interest on one card, a card with a much higher balance and a lower interest may still cost you more monthly in interest.

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You are always better off paying the higher interest card.  Pay off the highest interest one, while paying minimums on the rest.  Once you have that one paid off, repeat with the 2nd highest.

[Anonymous]

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@heyarrnold wrote:

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@1GaDawg85 wrote:

I would go for the ones with the highest interest rate

---

+1

But TBH, I would do the math. Look at your balances and their interest. Although you may have a higher interest on one card, a card with a much higher balance and a lower interest may still cost you more monthly in interest.

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+2 for GaDawg, but disagree with heyarnold. I'm assuming that you're putting all of the bonus money into paying down cards. Because of that assumption, it would be better financially to pay off the higher rates first and trickle down. 

Example time: You get a $1k bonus. You have $10k on a card with 10% interest and $1k on a card with 30% interest. Without paying anythign off, you would accrue $1000+$300 = $1300 in interest from the two cards. If you paid off the 30% in full, you would accrue only the $1k from the first card. If you paid off as much as you could from the first card, you would still have $9k accrusing $900 on that card, plus the $300 of interest from the first card, for a total of $1200. Hopefully, you can see that it would be true even if your bonus was $2k (thus paying off card 2 plus as much as you can of card 1) or $500 (paying off as much as you can of card 2 is best). 

Don't worry about utilization rates yet. Get your debt under control, and long term, the utilization rates will drop and your scores will increase. Good luck!

Edit: As one of the posters above me said, make sure you make the minimum payments on all the cards before targetting the one with the highest interest rate. You don't want any baddies from failure to pay the minimums.

[Anonymous]

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@1GaDawg85 wrote:

I would go for the ones with the highest interest rate

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+1

[Anonymous]

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@Anonymous wrote:

So i am in debt quite a bit. but good news is i just got my bonus check! I wanted to know should i pay off my two biggest credit cards that have debt or  the smallest ones. currently i owe chase 6.5k and discover  6k. and my lowest credit cards have a balance of: homedepot 1.2k and walmart mastercard $600.

please let me know what should be paid off first. thanks in advance.

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Assuming your bonus is $12.5k. Personally I would want the feeling of accomplishment, and would pay off WM, HD, Discover, and pay the rest on Chase. Chase probably has the lowest interest rate (just assuming). Plus, this way when you are paying extra towards your debt after bonus, you are paying to only one company instead of multiple. 

But congratulations on getting a bonus and being responsible with it and paying your debts off! 

[heyarrnold]

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@Anonymous wrote:

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@heyarrnold wrote:

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@1GaDawg85 wrote:

I would go for the ones with the highest interest rate

---

+1

But TBH, I would do the math. Look at your balances and their interest. Although you may have a higher interest on one card, a card with a much higher balance and a lower interest may still cost you more monthly in interest.

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+2 for GaDawg, but disagree with heyarnold. I'm assuming that you're putting all of the bonus money into paying down cards. Because of that assumption, it would be better financially to pay off the higher rates first and trickle down. 

Example time: You get a $1k bonus. You have $10k on a card with 10% interest and $1k on a card with 30% interest. Without paying anythign off, you would accrue $1000+$300 = $1300 in interest from the two cards. If you paid off the 30% in full, you would accrue only the $1k from the first card. If you paid off as much as you could from the first card, you would still have $9k accrusing $900 on that card, plus the $300 of interest from the first card, for a total of $1200. Hopefully, you can see that it would be true even if your bonus was $2k (thus paying off card 2 plus as much as you can of card 1) or $500 (paying off as much as you can of card 2 is best). 

Don't worry about utilization rates yet. Get your debt under control, and long term, the utilization rates will drop and your scores will increase. Good luck!

Edit: As one of the posters above me said, make sure you make the minimum payments on all the cards before targetting the one with the highest interest rate. You don't want any baddies from failure to pay the minimums.

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Remember, I said it may lol. It depends on OP's interest rate. We know the balances, but we are not aware of what OP's interest rates are. Take for example:

Balance $500, Interest: 22.00%/12 = 1.8333%,  interest to pay of balance: $9

Balance $5000, Interest: 20.00%/12 = 1.666%,  Interest to pay of balance: $80

Just because a lower interest rate is available on one card, depending on the balance, it MAY be wiser to pay a card with a higher balance first.