@Anonymous wrote:I've always paid all my credit cards down to zero every month until earlier this year when I lost my income. Regrettably, I started paying rent and bills with my credit cards. So now I have a huge amount of debt and I'm asking for advice on how to pay it down to receive the best benefit. There are eleven cards total including the dental credit with the highest balance. I'll go ahead and list the balances on each card so maybe one of you can advise me how to pay them off and if there is a particular order that should be followed. They all have the typical high interest rates for credit cards. Around 25% (I will have to check every account to see if some are different). I plan on devoting and extra $1,000-ish each month to pay on them.
$1,264.07
$658.39
$2065.92
$2466.71
$571.19
$500.51
$870.57
$1314.24
$7627.01
$767.97 (0% interest. Must be paid by October 15)
$46.78 (I plan to pay and close this account this month)
I am also clueless as to how interest works on credit cards. Assuming I don't charge on any of these cards anymore, will the amounts go down as I pay them down? For instance, if I pay $100 on the $658.39 CC, will it go down to $558.39 and not amass more interest? I'm asking because I don't know if credit cards are different from home loans where a certain amount goes to principle and a certain amount to interest. Should I pay off certain cards fully instead of paying a little extra on every card? Any advice will help me a lot. Please let me know if there is anything else you need from me.
Snowball method.
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.
What was said above, pay off smallest amounts first and eventualy you'll be down to just a few high dollar cards. Sorry you lost your income, hopefully we can all push towards getting back to it sooner rather than later.
@SouthJamaica wrote:
@Anonymous wrote:I've always paid all my credit cards down to zero every month until earlier this year when I lost my income. Regrettably, I started paying rent and bills with my credit cards. So now I have a huge amount of debt ...
Snowball method.
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.
The "snowball' method is one way to do it and makes complete sense if your APRs are all equal or very close anyway. If APR is equal, you gain the "psychological victory" of seeing more accounts paid off more quickly which is motivating to continuing the process.
However, if there is a variation to rates, it could be helpful to target the higher APRs first. Here is a posting from one of our other members who asked for advice a few months ago and then succesfully did that method. (He was $39K in debt and yours is actually much lower at about $18K.) The great thing about this is that if you target the right credit lines, you *MAY* be offered attractive Balance Transfer promotions to move debt back onto that card! So freeing up the space with the right lender can help you accelerate the payoff.
See Link:
This is snapshot with the data provided.
It is two year adventure but can be done.
