Is it better to first pay off high interest rate balances, or lower rate balances w/ higher monthly payments?

Question

It's possible to maintain accounts with higher interest rates, but lower balances than accounts with lower rates with higher balances. In terms of personal finances, which do you pay off first, the higher monthly payment balance with the lower rate, or the higher rate balance with the lower monthly payment?

Answer 1

Pay off the higher interest rate balances first. Those are the ones that are costing you the most in interest charges. If you pay off $100 on an account with an 18% interest rate, you're saving $18 a year in interest charges. $100 on an account with a 12% interest rate only saves $12.

Be sure to make at least the minimum payment on all your accounts though so you don't get hit with late fees, penalty interest rates, and dings on your credit report.

So, pay the minimum on everything first, then allocate as much extra money as you can to the ones with the highest interest rate.

And once you get all your debt paid off, then start saving money and let the bank pay YOU interest instead of you paying THEM which is what happens when you have debt. You'll be amazed at how much more money you'll have when the interest is coming in rather than going out.

Answer 2

The higher interest rate cards are costing you more money. If you are paying 23% interest on a balance of $2000, with a minimum payment of $50 minimum or 3% whichever is higher, and you only pay the minimum, you will end up paying almost $1700 in interest and will take you 6 years to pay it off.

If that same card is 12% interest, it will take you 4 years and cost you $450 in interest.

The goal here is to get the cards paid off and save as much money as you can in interest.

If you pay the high interest cards off, you'll be saving what you are ultimately giving to the credit card company in interest payments.

Pay the minimum payments on the low interest rate card and put every dime you can towards the highest interest rate card. Once it's paid in full, add what you had been paying them to the next highest until you get them all paid off.

And quit charging. It's tough but you can do this.

Answer 3

Pay off the higher interest balances first.

Answer 4

call the mastercard companies and tell them which you won't manage to probable proceed to pay the expenses on the present costs of interest and which you're afraid you will default in the event that they don't decrease your fee. attempt to barter a decrease charge ASAP. If all else fails, tell them that in case you default and you get sued by them which you will in basic terms would desire to pay the state mandated interest fee (9% in long island) it particularly is a lot under your contemporary interest fee and if that's what you are able to desire to do you will do it even nevertheless it particularly is going to wreck your credit so which you prefer to barter now on your fee earlier it particularly is too late.

Answer 5

truely... that is your choice...
number wise?
ALWAYS pay off higher interest first...
You can save HUNDREDS of THOUSANDS of $$ doing that...
But seriously... go to these calculators and see...