Tax return money.. Is it better to apply money to one credit card or split it up among the 3 cards I have?

Question

I came into extra money thanks to my taxes.
I wanted to know if it's better to apply it all to one card to pay down debt OR split it up among my other cards?
I know I read somewhere which is better.. but I forget.

Answer 1

Keep it simple. Apply the money to the lowest balance and then vow to wipe the rest of that balance out very quickly. Psychologically, you will feel better if you know that one more bill isn't coming next month!

The above advice is only if you are current on all bills. If not current use the money to become current (rent, utilities, credit cards, etc.). Also if you are serious about getting out of credit card debt you need to have a small emergency fund ($1000) so you don't use the credit cards again. If you are serious about not using the credit cards, read The Total Money Makeover by Ramsey.

I know, more info than you asked. Good luck with your decision!

Answer 2

There are two schools of thought. The first is to pay off cards with the lowest balances so that they are completely gone and you can concentrate on the rest. The second is to eliminate the highest interest rate debt first.

If the amount of money you have is enough to pay one of the cards off completely, then I would do that. You'd eliminate that payment. If it is not, I'd apply it all to the highest rate balance.

If they are all equal, then try to get the the credit limit - balance ratio down. Ideally, your balances should not be more than half your available credit limit. That's really the only reason I would divide the money up among the three cards.

Good luck!

Answer 3

Pay off your highest interest rate card first and then move to the next highest one. Goal is to reduce your interest payments as much as possible. You should also see if you qualify for an offer of 0% interest on a new card. If so, you should transfer all remaining balances over to that new card and pay it off before the 0% interest offer expires (usually about a year). Then get rid of all your credit cards except one. Use it for convenience, not credit, moving forward and you won't throw any more money away on interest payments.

Answer 4

Pay off the higher... and if you don't have enough to completly pay it off ~ ask your other CC company if they have any transfer specials going on. Sometimes ~ that will give you a super duper interest rate ~ and let you keep it for the life of the balance tranfer. That way ~ you can have just one card and prob get a better interest rate than what you had.

Answer 5

Depends.

On how much the "return" and how much and at what interest the debt.

I would pay off the highest interest rate cards first.

If you pay it off apply the payment you were sending to it to the other cards.

Answer 6

pay off the highest card

then take that payment and divide it by the other 2 to pay them down even faster

why carry 3 cut it up and close the account

Answer 7

Find whichever card has the highest interest rate and i would apply it all to that card. The quicker you can pay it down the quicker you will be debt free.

Also cut the card up!

Answer 8

pay off the one with the smallest amount owing first.. then go to the next smallest one on your list.. .. during this process you must pay the minimum amount due on all of them .. when they are paid off don't cut them up.. keep them as souvenirs, they will add to your credit rating if they are paid up. when you are finished paying off the last one have a party.. then go to your bank and get a personal line of credit..try to never use it but instead pay for everything with cash .

.

Answer 9

Pay off the one with the highest interest rate. Then close the account. Why carry three cards? That just incourages spending..

Answer 10

TO improve your credit score, figure out what 25% of the credit limit is on each card, then if you can, pay down each one to that dollar amount.