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which to pay off first

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wrxlover2
Established Member

which to pay off first

hi everyone i was wondering i want to start paying off my debt and getting my credit up but idk whats better to pay off first

i have one card which has a balance of 2300 and the limit is 2900

and then i have another card which has  a limit of 900 and the balance is at 800

which one would you pay first which one would help the most?

Message 1 of 5
4 REPLIES 4
bmis42988
New Contributor

Re: which to pay off first

what are the aprs? generally its better to pay off the lower balances first and once you pay it off, put the money you were paying the lower balance with towards the larger balance.

TU: 687 EQ: 670 EX: 665
Message 2 of 5
Cleanmachine
Frequent Contributor

Re: which to pay off first

I would suggest you tackle the card with the highest interest first.

 

Why paid more interest that you have to. ??

Message 3 of 5
TheConductor
Established Contributor

Re: which to pay off first

As you'll see in the two previous responses, there are three common approaches, of which you've already been given two:

 

1) Pay the highest interest rate first, no matter what, even if it is the biggest balance.  In the long run, this ensures that you are paying the least amount of total money to get your debt down to zero.  It's what I commonly recommend; however, many prefer:

 

2) Pay them in order from smallest balance to largest. While you end up paying more this way, it makes it easier for some people to stay psychologically motivated to pay their debt.  You get to earn some achievement badges early and often, especially if your debt is spread across a lot of balances.

 

3) Pay them in strategic order according to what is likely to boost your FICO score the most.  Depends on your priorities: what matters most? Retiring your debt, or having the best possible credit score?

 

Personally, I think #2 is a cop-out.  Either you have the discipline to manage your credit well, or you don't.  If you do, then being able to retire your debt under method 2 only serves to prove you could also have done it with method 1 and saved some money.

 

And I regard #3 as a distraction: when you're carrying debt it's not the time to be thinking about adding more. So focus on paying those balances and let your score do it's own thing for a while.

 

But in the end, I have nothing but praise for those who commit to any method.  I may have my preference, but what I admire most is simply making the commitment to improve your financial situation and following through on it. If you can do that, any way at all, you're a hero.

 

Best of luck in your journey!

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Message 4 of 5
wrxlover2
Established Member

Re: which to pay off first

thanks for your response that is certainly encouraging to me i think i will choose to pay the one with highest interest thank you for you response this will help a ton and i thank you

Message 5 of 5
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