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Paying off Debt

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garci349
Established Member

Paying off Debt

I have 3 maxed out credit cards. One of the credit cards is 0% interest until this June. Additionally, I have a reserve line from US bank that is charging me $20 interest a month. Which one do I pay off first? or All of the equally. Im lost.

Amex Green Card, U.S. Bank Platinum $2,000, U.S. Bank Line of Credit $1,500, BoFA Visa $500, C1 $500
Message 1 of 7
6 REPLIES 6
bs6054
Valued Contributor

Re: Paying off Debt


@garci349 wrote:

I have 3 maxed out credit cards. One of the credit cards is 0% interest until this June. Additionally, I have a reserve line from US bank that is charging me $20 interest a month. Which one do I pay off first? or All of the equally. Im lost.


Two common strategies:

 

1) Pay off first the account with the highest APR (so minimum on the 0% until the intro period ends).   This saves the money spent on interest.

 

2) Pay off the smallest account first.   This allows people to see the progress that they are making (four loans, then three etc), even though more will spent on interest.

Message 2 of 7
enharu
Super Contributor

Re: Paying off Debt

Pay off highest APR first, then go to next, eventually go to the lowest APR card. Paying such exorbitant finance fees are just crazy and things get out of hand too fast for anyone to control.

If you can't pay it down fast and your cards are drowning you in fees, get a personal loan to pay off your cards. Much lower interest fees
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Message 3 of 7
MovingForward_2012
Valued Contributor

Re: Paying off Debt

I would devote all your attention to the high interest balances first and then tackle the 0% promo cards.

What are the balances and how much money do you have to devote to paying all of these off?
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 4 of 7
Funk-O-Meter
Contributor

Re: Paying off Debt

If your credit is in otherwise good shape you could try for a card with a balance transfer feature like I just did. Chase Slate has 15 months@ 0 APR on balance transfers and no transfer fee. If your credit is hurting and your maxed you should go for a personal loan and avoid the snowballing interest fees. Even a new card with 0% on balance transfers but with a 3% transfer fee can save you a chuck and give you another year to pay down.
Message 5 of 7
HiLine
Blogger

Re: Paying off Debt

Here's the simple rule about paying CC debt:

 

1. Pay all the minima first

2. If there's money left over from step 1, pay the balance with the highest interest rate

3. If there's money left over from step 2, pay the balance with the next highest interest rate

4. If there's money left over from step 3, pay the balance with the next highest interest rate

5. If there's money left over from step 4, etc.

Message 6 of 7
SnackTrader
Valued Contributor

Re: Paying off Debt

Good luck - I agree with all above.

Most importantly, make a budget and stick to it. You are in debt, so try to live less luxuriously than you would otherwise.

In My Wallet: Amex BCP (12/12) $50,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Prestige (4/16) $30,000

Last App: June 27, 2015
Message 7 of 7
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