pay off higher interest rates first or get util down on each CC

[Sk323i]

Is it better to pay off higher interest rates first with a max payment and pay minimum on the rest or is it better to get util down on each CC equally?

[gibeon]

Depends on what you're trying to accomplish, I suppose.

If you're not applying for anything, try to pay less interest by clearing high interest debt first. But don't forget to weight the calculations (APR * Balance) as a high balance on a low rate card can actually cost more than a relatively low balance on a high rate card.

If you're worried about scores, one card with a a balance, and that balance being under 10% seems to be the way to get max scores, all else being equal.

[Anonymous]

Correct me if I'm wrong, but the balance on the card has nothing to do with choosing which to pay. Always pay the high interest first. 

For example:

Card A. $100 balance at 2% interest = $2 

Card B. $1000 balance at 1% interest = $10

if you have $100 to pay and pay card A off you are left with $10 from card B. 

if you pay $100 on card B you are left with a $900 balance x 1% = $9 plus the $2 from card A for a total of $11. 

As to the OPs question. I personally couldn't care less about getting each down equally if I'm carrying a balance on multiple cards. I'd focus on getting the costliest paid of quickest. As for just paying the minimum on the others? I mean maybe each company has its own internal scoring which dings you for paying the minimum, so you might consider paying a little more than the bare minimum, but I don't see how there's any permanent adverse affects to your fico. Your score will eventually go up as you pay more off, I don't see the reasoning behind paying more in interest because you're concerned about your score this month. 

That said, maybe it's a bit more difficult to quanitify the psychological effects of paying off a card in full. I'd guess paying off a card, any card, in full would help you sleep better at night if you're in over your head. If you're not, then don't pay more interest than you need to for some possible temporary point boost. 

[Anonymous]

Pay off the highest interest rate card first and same yourself some money.  Your aggregate utilization will be the same regardless of which card you are paying down.  Individual utilizations matter less than aggregate, and IMO matter less than the interest you'll save. 

[Appleman]

It will depend. If you have a card at 90% utilization, that is considered maxxed out and I would pay and get that below 70%.

Can you give us a little more information on utilization %'s and how long you think it will take you to pay off your debt?

Additionally, any time frame for obtaining additional credit products like a mortgage or auto?

[Sk323i]

I have a limit of 9500 with 7350 in current debt = 77% util. 

I have 1 card at 100%. 4 cards at 80% and 1 card at 40%. 

I want to apply for my first mortgage soon. 

I have 0 expenses currently as I just moved back in with my parents. I net about 3200 a month. Should be able to pay debt off in full within less than 6 months. Depending on other factors such as the loan, etc. 

[Dalmus]

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@Sk323i wrote:

I have a limit of 9500 with 7350 in current debt = 77% util. 

I have 1 card at 100%. 4 cards at 80% and 1 card at 40%. 

I want to apply for my first mortgage soon. 

I have 0 expenses currently as I just moved back in with my parents. I net about 3200 a month. Should be able to pay debt off in full within less than 6 months. Depending on other factors such as the loan, etc. 

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 What are the balances on your other cards?  If they are low-ish limit cards, I'd pay those off first, and then you can apply all the money that would go towards that minimum payment to the remaining cards.

 Since money doesn't really seem to be an issue ($3,200 with no expenses...) I guess I would pay the high interest cards off first.  If money WERE an issue, I would pay off low balance cards first, as the montly minimum payment "savings" would be more than the reduction in minimum payment I would see by paying the same amount towards a high balance card.

[Anonymous]

That's right if you have 5 credit cards even with small balances that's a hundred twenty five bucks inminimum payments. If all of your accounts are charging interest suck it up and snowball them to free up funds to work on the next card

[Anonymous]

in your situation i'd pay them off, higest interest first, then start saving your downpayment, then start thinking about applying for the mortgage. Paying in a certain order for the best score right now is of no benefit in your long term plan. Your score will be the best it's going to be once you have 0 balances on 4 cards and 1% on the 5th. 

[Anonymous]

Honestly, I wouldn't be thinking about a mortgage until your scores are at least in the mid-upper 600's; 700+ of course is better.  The difference in time to get your scores from 650 to 700+ probably isn't very big, and compared to a 30 year mortgage is a drop in the bucket.  I'd suggest waiting and allowing your scores to grow before applying as you'll literally save thousands of dollars, even tens of thousands of dollars over time due to being to obtain a more favorable interest rate.