Order of Credit Card Payments

[Anonymous]

I am a newbie to this forum and have been reading some of the posts.  There's a lot of great advice!  However, I have not seen my specific question answered.  I understand the logic of paying down the highest interest credit cards first.  But, does this logic still apply if the actual $$ amount being paid in interest is higher on a lower interest, higher balance card than it is on a higher interest, lower balance card?  Please advise!!

[marty56]

Welcome to the forum.  It depends what your goal is.  If you are just interested in saving money on interest, then paying off the higest interest card makes sense.

From the FICO score side, interest rates dont matter.  What matters is %util.  In getting out of debt, most people recommend paying minimum payments all but the acount with the smallest balance and paying extra on it until its paid off.  Then attack the next smallest and so on.

On cards that have different interest rates on balances, unless the law changes, you wont be able to pay the higher interest rate balance(s) until the ones with the lower rates are paid off.  That is why it is never a good idea to use a card that you got a promotional interest rate/cash advance on until it is paid off.

Message Edited by marty56 on 12-26-2008 03:49 PM

[Math_Rocks]

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@marty56 wrote:

Welcome to the forum.  It depends what your goal is.  If you are just interested in saving money on interest, then paying off the higest interest card makes sense.

From the FICO score side, interest rates dont matter.  What matters is %util.  In getting out of debt, most people recommend paying minimum payments all but the acount with the smallest balance and paying extra on it until its paid off.  Then attack the next smallest and so on.

On cards that have different interest rates on balances, unless the law changes you wont be able to pay the higher interest rate balance until the ones with the lower rtes are paid off.  That is why it is never a good idea to use a card that you got a promotional interest rate onl/cash advance until its paid off.

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I agree with above! It might help to get an idea of your individual account utilization and overall utilization.

[Anonymous]

Thanks for your responses.  For the particulars, I have a Visa that I owe approximately $5,500/$15,000 (24% APR) on with an interest payment of $95.00.  I have a Mastercard with a balance of $13,000/$14,000 (12% APR) on with an interest payment of about $130.00.  I am not sure which one I should concentrate on paying off first.  I have other 12% interest cards with about a 90% utility on, so I guess I can't really be concerned about my FICO right now. Those balances range from $200 to $4,000.  Ultimately, I want to pay them all off, but I just wasn't sure if there was a better order or if, in this case, it really doesn't matter.

[cobaltnv]

Sunshine,   You will save more money (alot more) by paying off the 24% apr balance first. You might also try to call the ccc and ask about a getting a lower APR. If you have other unused cards you might look into a low interest balance transfer. 24% is a very high interest rate. My suggestion is to go very carefully through your budget and cut out anything you do not need (starbucks, dining out, etc). Figure out how much you can afford to throw at your debt every month and pay the min on the MC and put the rest of the $$ toward the Visa until the Visa is paid off. Then put all the $$ toward paying off the MC. How much do you think you can afford to put towards the cc debt each month?

You can get through this!

Good Luck