What's the best plan of attack for my situation?

[dguerrero001]

Hello,

I have 2 credit cards I am in the process of paying off. I'm planning on making a payment of at least $1000 soon, but not sure which card would be best to do it towards. See below for layout:

CREDIT CARD 1

Purchase Balance - $850 @ 22.90%

CREDIT CARD 2

Purchase Balance - $2, 060 @ 18.24%
Cash Advance Bal. - $630 @ 23.24%
Balance Transfer Bal - $1, 300 @ 18.24%

Obviously I would like to pay off the Cash Bal. first since it has the highest rate, but not sure the cc company will pay that balance off. (Unlikely) So what's my best plan of attack?

Thanks.

[OptimalCS]

I'd payoff card 1- sock draw it and then focus my energy on paying off card 2.

[LawStudentCivilis]

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@OptimalCS wrote:
I'd payoff card 1- sock draw it and then focus my energy on paying off card 2.

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Agreed!

[koalablue]

You might also consider a debt management program.  They could probably negotiate with the credit card companies to significantly lower the interest rates so that the amounts you're paying each month would go more towards the principal. You wouldn't be able to have any new credit cards while in the DMP but that is probably for the best anyway.

[SnackTrader]

Why would the OP need a debt management program!?!?

There was no mention n the OP's post that payment is a problem. The OP has debt, but appears to have some cash to work on it. Debt management programs are one of those last resort type things and can really affect you for quite some time. I would not recommend that for this OP at all.

I would put the payments toward card 2. My understanding is that based on the CARD Act any payment over the minimum MUST be applied to the highest interest rate first. So, that would reduce your interest expense more than by paying Card 1. But at the end of the day, both payments are going to work on APRs over 20%, so do what you feel comfortable with. And keep working on the debt!

[Kels]

Someone please correct me if I'm wrong but I think this applies to the OP's situation:

Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) requires that card issuers apply payment amounts in excess of the minimum payment to the highest interest rate balance. If this applies here, that would be the cash advance amount.

Read more: http://www.creditcards.com/credit-card-news/ossenfort-credit-card-minimum-payment-rules-1292.php#ixz...

[09Lexie]

@SnackTrader and Kels are correct. The pyt if applied to Card 2 will go towards the highest APR first.

[dguerrero001]

Thanks for the feedback guys.

Yea, my intial plan was to pay off credit card 1 and pay more on credit card 2 thereafter.

Doing debt management program isnt really necessary since I can make the payments. As stated, it seems to be a last resort option.

I need to check with credit card company on how payments are applied, as I have read different outcomes regarding the CARD Act.

[koalablue]

I think I meant my reply for a different thread - sorry about that.  You're right, a DMP isn't necessary here.  Good luck with getting your cards paid off.  You'll get there.