I have 7 CC's. Better pay down method: Suzie's or Dave's?

[Anonymous]

I currently have 7 open credit card accounts. Some have high limits, others have small limits. I'd like to pay them down as fast as I can humanly afford to, and have researched both Suzie Oreman and Dave Ramsey's methods of paying down your credit cards. Suzie stresses to attack the bigger cards, with the highest interest first and to try and pay more than the minimum payment due, preferably doubling your payment. Dave on the other hand, recommends paying off your smallest cards first so that they are out of the way and you are left with the bigger ones to focus soley on. Which method do you guys advise? I like Dave's way because of the fact that your zero'ing out your cards fast, but I also think Suzie's way is very important, because we all get sick of those high interest card balances that seem to barely decrease on our statement every month. Thanks for any help.

[guiness56]

For myself, I would pay down the smaller amounts first, then use that money to apply to the higher interest ones.

The reason I would do this is the feeling of accomplishment.  If you see right away the impact of paying off the smaller ones, you will more than likely continue to pay the higher interest rate ones. 

[Anonymous]

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@guiness56 wrote:

For myself, I would pay down the smaller amounts first, then use that money to apply to the higher interest ones.

The reason I would do this is the feeling of accomplishment.  If you see right away the impact of paying off the smaller ones, you will more than likely continue to pay the higher interest rate ones. 

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Exactly what I have done in the past.

[llecs]

Score-wise, you are better off paying the smaller balances first. You'll show more $0 balances sooner.

[marty56]

Yes, Dave's method is the best in terms of getting out of debt and FICO score.  DMP programs use the same method and its easy to manage.

Message Edited by marty56 on 07-11-2009 06:18 AM

[BungalowMo]

I did the same.  One cc $850 limit...$0 bal   2nd $2500 limit...$200 bal last $8400 limit...$6000 bal.

Can't tell what the score change will be as aboved reflects what it "will" be when the new payments & CLI's are updated.

[Anonymous]

It is not the CL but what the CL is and what you owe on each. FICO likes to see some CC with a Bal $0  but active.

I do the same, I pay the CC that I owe the least on first & then add that amount to another higher CC.

[Anonymous]

I vote for Dave's way.  I have used that method myself.  I was really in a tight bind, so I could not afford to do it Suzie's way when I first decided to get out of debt.  3 out of 5 accounts that create my debt are gone.  Now I have cash flow to work on the bigger ones.   

[Anonymous]

Although Dave's way does give that sense of accomplishment and that can go a long way towards your overall progress I think the real key is the interest rates.

You could have a small balance of 1k with 11% and a big balance of 8k with 23% and you HAVE to pay down the 28% card it will eat you alive. I've found this to be the case on more than on occasion.

I guess there is some balance in the middle somewhere.

[PayingTheBills]

^^^^^exactly.

There is no one size fits all approach.  There are some cases where you could flip a coin to choose between Suze's or Dave's methods (depending on your specific situation), but other times it is financially irresponsible to choose Dave's.  

Manage your debt FIRST, then manage your score.  If you are gong to spend hundreds or thousands more in interest in the name of getting $0 balances on lower interest cards so you can "get a win", then you probably do not have the discipline to properly manage your CC's in the future anyway.  Money is tight all over, find a plan that helps you use less money in the long run to pay off your debt.

just my $.02

Message Edited by PayingTheBills on 07-12-2009 10:08 AM