I have 2g which debts should I pay off first?

Question

Okay, I'm going to get my financial aid in a few weeks. (2 grand) I'm planning on using all that money to pay off some of my debts, but I'm not sure which is a smarter thing to do. Should I split that money to pay of some of these debts? Or should I pay 1 whole credit card off?
Here are my debts: Citi (finance charge 18.24%) balance: $2,389; Wamu CC (finance charge: 15%) balance: $714;
Houshold bank (finance charge: 12.24%) balance: $246;
Chase (finance charge 24.24%) balance: $611;
and Capital One (finance charge 23.3%) balance: $414.
Thanks for your opinion

awww... thanks, sirblackie sweetheart. i really want to, but being (at least 1/2) debt free feels much greater for me! :)

Answer 1

There is no one right answer to that one, it depends on what you want to do.

One option is to pay off the ones that have the highest interest rates first. That way, the interest that accrues will be lower on the remaining debts.

Another option is to pay off the smaller debts completely. That will give you a sense of accomplishment because some of them are completely paid off. Just remember to not keep charging on them or you are right back where you started from or even worse.

I would pay off some of them, but keep some of the money in an account to live off of also, until your next grant check, so that you aren't charging more than you are paying off.

See this link below:

Answer 2

I'm sorry to say, but he's right and here's why : Having debt is a real downside to buy a house much more then the upside of having savings (trust me, I am in the process of buying a house). Without debts, banks will be more willing to give you a big mortgage because in the end, they substract the amount of debt you have of the mortgage or something like that - big downside. Also, unless your money is well placed, you barely make a penny on a 100$ sitting in a bank per month - while with debt, the interest rate as you pointed out can become really high. It is not true that you will have debt all your life and in my experience, you will be much more happy knowing you can live a debt free life - something banks or any other loaner won't ever tell you. Debt are a responsability, sure sometimes it is necessary but the time you can spend without having any is a blessing.

Answer 3

I would pay off the Wamu, Household, Chase and Capital One. That's about $1985 if I'm adding that right.

I'm guessing your minimum payments on those came to about $40 per month based on a 2% of balance payment plan.

I would then take the $40 you were paying on the other cards and apply that to your payment on the one remaining card. This extra $40 will make a big difference in how quick you pay that off. If you can find an extra $60 to apply so you're paying $100 extra each month, you can have this paid off by Dec. 2008.

Assuming your payment is 2% or $20, whichever is greater, and you just pay the minimum, it will be Dec 2029 when you get this paid off.

Not sure where to get an extra $60? It's easy and won't cost you anything. Go to the link below.

Answer 4

Pay Capital One and Chase (the two with the highest interest rate) off completely. Use the rest to pay Citi as much as you can.

Do not charge any more on the two with the ridiculously high rate (Capital One and Chase) and always pay more than the minimum on the others so you can get this debt reduced. That is WAY too much debt for a college student. You need to work on getting this paid off and use the cards only for things you can pay for at the end of the month when the bill comes.

Answer 5

I recommend you pay off the high finance cards first, Chase then Capital One then as much as you can on Citi. After that, continue to make the minimum payments on the lower rate cards and use any extra money to pay off the Citi card. When that's paid off, go to the next high finance card and concentrate on paying that one off. I also recommend that you permanently get rid of those high finance cards. Keep only those cards with relatively low finance charges and no annual fee, and use those cards only when absolutely necessary.

Another option in lieu of the above is to get one of your credit card companies to give you a really good balance transfer deal and then consolidate all of those debts onto one card at a special low finance rate and use the 2 grand to make one big payment to the consolidated amount. Credit card companies do this all the time. Just call them up and ask them to give you the best deal they can. Don't feel that you have to go with the first one either. Ask several of them and compare offers. Be sure to ask them how you will be affected if already have an existing balance on the card. For example, on your Citi card you have an outstanding balance of $2,389 at 18.24%. If you then did a balance transfer of, say, $2,000, all of your payments might be applied only to the $2,000. Meanwhile, the $2,389 continues to be assessed the 18.24% interest! Be careful. It's best to do a balance transfer onto a card that has had no outstanding amount on it for at least 30 days. Those credit card companies can be tricky!

Good luck.

Answer 6

If I was you I would pay all the little ones. That way you only have a balance of the big citi card even though its at a higher interest, you will free up all your other minimum cards due and could put more of your income toward the citi one.

Also if you begin paying at least 500 each month toward the citi you will be done faster. If its possible put more, but only if you can. You will be debt free in no time. (but its better to pay off all the little ones...) Good luck!!

Answer 7

The answer depends on the age and status of each account. If an account is already in collections and is 3 years past due, it holds less priority than one that is current and maybe 3 months past due.

Also, if an account is past 7 years old from the date of last payment, then you may be able to get it deleted from your credit record without having to pay any money.

In addition, if any of your cards are current and have had them for a while you may be able to re-negotiate a lower monthly interest rate. Sometimes, all it takes is a phone call and ask that they reduce your interest rate.

You may also have some settlement options available to you that you will need to investigate.

$2000 is a lot of money and if its a one time deal you must be careful to spend it wisely. If it is a monthly income, plan wisely to reduce your debts and eliminate your cards so that you don't repeat this cycle.

Answer 8

The ones with the highest interest rates. Yes,pay off one card first. Great idea to pay off the debt with F/A. Don't spend it on stupid stuff, cause after a shopping spree, you'll still be in debt. Cancel all but one for emergencies. If you have good credit, work hard to keep it.

Answer 9

I would pay the 414, 611 and 246 balances. spend the rest on yourself, have a little fun. You only live once.

Answer 10

Pay off the highest rate one first. Then the next highest. Work down the interest rates from highest to lowest until you run out of $$$.