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Regular Contributor
turninganewleaf
Posts: 140
Registered: ‎08-08-2007
0

Pay off first?

I'm pretty sure it is common sense, but I was looking at paying off my smallest credit cards one at a time.  Here are the three I'm going to tackle first (simply based on smallest balances).

 

Chevron CL 400, Bal 353, 21.49% APR

 

Target Redcard CL 500, Bal 468, 20.99% APR (about to go up to 22.99%)

 

Chase BP Card CL 300, Bal 285, 19.24% APR

 

Common sense tells me to pay off the ones with the highest APR's first (Target or Chevron).  However, the Chevron card I don't use quite as often anymore so I could pay it off and let it sit with a $0 balance.

 

Are these APR's high for these cards or is that about right?  I have mid-600 FICO's.

 

 

 

 

 

 

FICO 8/5/10; TU 724, EQ 702
FICO 6/9/09: TU 669, EQ 658, EX ???
FICO 7/20/07: TU 540; EQ 595, EX 544
Regular Contributor
turninganewleaf
Posts: 140
Registered: ‎08-08-2007
0

Re: Pay off first?

BTW, these cards are all over a year old and have been in good standing (no negs).

FICO 8/5/10; TU 724, EQ 702
FICO 6/9/09: TU 669, EQ 658, EX ???
FICO 7/20/07: TU 540; EQ 595, EX 544
Established Member
hotsaka
Posts: 62
Registered: ‎01-13-2009
0

Re: Pay off first?

i would pay them off in order of apr but since the rates are so close and amounts are too small it would likely only cost a dollar or two extra if you pay them in some other order
Regular Contributor
Locksley123
Posts: 128
Registered: ‎02-13-2009
0

Re: Pay off first?

1) Call each card and see if you can negotiate reduction of APR

2) Since all the rates are about the same, pay them off equally - so the utilization ratio is the same on each card. 

Regular Contributor
turninganewleaf
Posts: 140
Registered: ‎08-08-2007
0

Re: Pay off first?

How do you go about negotiating APR's?
FICO 8/5/10; TU 724, EQ 702
FICO 6/9/09: TU 669, EQ 658, EX ???
FICO 7/20/07: TU 540; EQ 595, EX 544
Regular Contributor
Locksley123
Posts: 128
Registered: ‎02-13-2009
0

Re: Pay off first?

Call the number on the back of each card and say that you think your APR is too high/your other cards have lower APRs. Ask customer service agent if she can lower APR. It doesn't always work, but sometimes it does.

 

I managed to drop rates on two of my cards from 20ies to single digits. Good luck.

Contributor
oneilldn
Posts: 84
Registered: ‎03-03-2009
0

Re: Pay off first?

I'll go for the lowest to higher balance first, not for apr. That's the mistake most people make, when they go for the high apr first. I know it sounds crazy, but doing it by the lowest balance first you are using the "snow ball" technique.

List all your cc's on a paper, starting with the lowest balance one and finishing with the highest balence one. (Doing a budget will work better), then, you will send as much money as you can to the first one on the list while keep paying minimum payments on the rest. When you pay off your first card on the list, you'll add that amount you were paying on the first one to the second one on the list, and so on...The "snow ball" technique was created by Dave Ramsey (the author of "the total money make over", I did it, and it works, why? When you start paying your lowest debt first you start see results fast and you get motivated..... Hope this help.

02/2009- EQ 502/TU 516/EX 499
11/2009- EQ 701/TU 709/EX 721(fako)
03/2011- EQ 719/TU 729/EX 733 (by lender)

'NEVER GIVE UP"
Regular Contributor
Locksley123
Posts: 128
Registered: ‎02-13-2009
0

Re: Pay off first?

This is dumb idea as you pay extra financing charges. 
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
0

Re: Pay off first?

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Moderator Emeritus
llecs
Posts: 32,881
Registered: ‎08-04-2007
0

Re: Pay off first?

I agree with the snowball. IMO, he didn't come up with it, but the plan works. Aside from paying off debt faster, you will also see a score increase sooner (FICO like to see $0 balances). Psychologically you'd also feel better having less debt to worry about, or rather less cards to pay. You also run the risk of APR increases in today's economy so basing debt paydown on your current rates is rather risky.

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