What is the fastest way to pay off credit card debts other than consolidating them?

Question

I have heard that paying the highest interest rate card off first is the best way, but I have also heard that paying the lowest amount off first is the best way. I'm open for suggestions , thanks.

Answer 1

Start with the highest interest rate card or the card with the lowest balance--whichever you prefer. Only pay the minimum on the rest of the cards. Any extra cashflow should go to paying off the chosen card. Once it's paid-off, snowball the money that was going to that card to the next card you choose to pay off...and so on, and so on. By choosing the highest interest rate card first, you obviously are eliminating the most wasted money being spent on interest; however, sometimes it's a smarter move to start with the smallest balance so you feel as though you're accomplishing something and don't become discouraged. On that same note, it is important not to put every extra penny onto paying off the cards. You MUST leave yourself a little "fun" money or you WILL become discouraged and throw in the towel. Good luck! You can do it! It's worth it!!!

Answer 2

Do accelerated debt reduction.

Take the total you pay now for all debts and don't reduce it once a debt is paid off. Also stop any further charging.

If you have four debts of $100, 200, 300 & 400 a month, pick one - it really makes no difference, although you do save some interest starting with the highest APR.

Say that is the $100 a month debt. Once that is paid off, add the $100 to the $200 and so on.

You can even do this with your mortgage. Depending on your exact circumstances you can be debt free in 8 or 9 years and have saved tens of thousands in interest.

Read the article below:

Answer 3

If by "consolidating" you mean going into "official" debt consolidation, a different option may be to see if you can get a loan or one, high-limit credit card with low fees and interest, and start by transferring the balances into one bill.

If its possible to pay the high-interest card off first I'd do that because as long as that account is open you will be running up interest; and if the payment, by any chance, is late you'll run up even more fees.

The other side to that, though, is if you're able to make the payments on the high-interests account(s) and by paying off a bunch of smaller accounts with lower interest would simplify life for you that may be the way to go.

One other idea would be to pay off the low-interest account(s), keep it in good shape, maybe even go with any credit line increases that could result in an account that's in good shape; and then you could start to do this kind of thing: Use those cards instead of your cash for a while, and pay down the high-interest accounts more quickly with as much cash as possible.

What you'd end up with (if you play your cards right and carefully) would be a gradual transition of your balances to lower-interest cards; thereby both establishing good payment of the high-interest accounts while, at the same time, reducing the opportunities for those companies/banks to charge you more interest or fees.

You have to think out such a plan, know how much of your cash you can afford to use (and "replace" with the other cards). In other words, you can't just use your whole income to speed up the transition process. You have to think it, be careful, stick with the plan (because not sticking with it has the potential for disaster, or at least more problems)

What's the advantage of this two-step plan to, say, just paying off all the low-interest ones and leaving the high-interest one for later? Maybe not all that much, but what you would accomplish is that you've paid off the low-int accounts (looks good), increased your payments to the high-int accounts (looks good), and any increase in the low-int accounts would be gradual (so making payments just over minimum would be on the low side for at least a while).

Because someone's income, other financial issues and ability to stick with such a plan would determine whether this would work or not; it would work for some situations/some people. It is, of course, a more gradual improvement in the financial picture; and if someone can just pay off the biggest bills there would be no need; but there are times when someone can't just pay off stuff in one giant lump and needs more of a "program" to improve the situation of a longer period of time. There are situations when this type of thing would be better than nothing.

Answer 4

The experts will tell you to start with the highest interest rate and work your way down, which makes sense from a financial standpoint. However, PERSONALLY, I found it easier to start with the lowest balance and work my way down because as I paid off the bills -- it gave me a sense of achievement. It all depends on what works for you, just remember to always make the minimum payment on all of your cards, before you send extra on anything. It defeats the whole purpose if you are winding up with late fees, etc.

I have sent a link to a great Loan calculator that allows you to fill in interest rates, how much you owe, time lines etc so you can get a better picture of where you are headed and what you'll be paying in interest on any given card, over a certain period of time.

Answer 5

You have already been given the best information. Each answer is right for a different objective.

If your goal is to pay off the total debt the fastest then pay the card with the highest rate first. If your goal is to minimize the number of outstanding bills that you have, then pay the one with the lowest balance first.

You have the info, now it is your turn to sit down and decide your strategy, then implement it.

Answer 6

The operative word in your question seems to be "fast", so...

Start, or continue, looking and applying for lower interest rate cards. This seems at first to be working backwards, but keep reading. To quickly pay off your debt, you want to repay as much as possible, as soon as possible, AND reduce interest rates at every opportunity. This creates a bit more effort/work as you must keep reapplying and transferring balances - but you asked for "fast".

If you had a choice between paying off a higher interest rate credit card, and transferring the balance to a different lender at a lower interest rate - do the transfer! One issue that will influence your decision is if you have a balance that is slightly more than 50% of your credit limit on a credit card: by paying down, or transferring part of the balance to LOWER the balance to less than 50% of the credit limit, you are helping yourself to be a lower risk for applying for more credit.

Now the only reason for applying for more credit is to transfer balances, OR if the card has a lower rate for purchases; to charge items to that card, and use the cash to pay off the higher rate card. This also assumes that the spread of points between the two cards is worth the effort.

Finally, throw every penny you have at your debt for 3 to 6 months. This means living very cheaply, eliminate all unnecessary expenses since essentially, you are currently borrowing money to pay for them - many people don't immediately recognize it that way, at first though.

That's it. Hope this helps.

Answer 7

Pay off the highest interest card first and make more than the minimum payment on it. Then go to your next highest, pay everything you can on it

Answer 8

Transfer to a card having no interest charges for six months say, and then to another similar one and so on. In the mean time pay in as much as you can.

Answer 9

Does your bank offer line of credit? You may want to do that, pay off the cards with it and just pay the credit line. The interest is very low. Just don't rack up your cards again while you are paying down the line of credit.

Answer 10

pay on both, send something more than minimum amount. if you pay one and let the other go it will just make the second one higher

oh and you might try not charging anything on them until after you pay the balance off