Me and hubby have decided to really crack down and pay off all debt. If you have, say, 7 credit cards (assume the interest is the same on all) and a few are around $1000, some say $3000, $6000, & $10,000. Would it be best (my opinion) to pay extra to the $1000 ones first until they are paid off then take the extra and the minimum and go to the next lowest card and so on. OR does it matter? My husband said if we pay extra to each card it comes out the same...
2007-09-02 02:07:01 · 9 answers · asked by beth l 7 in Business & Finance ➔ Credit
If interest is the same. Pay off the smallest first. You will have a feeling of accomplishment and are more likely to continue paying off the rest of them. It will also mean savings in stamps and time because you then have one less bill to worry about. That works only if interest is the same. The total interst paid will be the same whether you owe $10,000 in one account or spread over 20.
Finacially it makes no difference, Pyschologically and time saved it does.
Otherwise pay off highest interest card first no matter the what the balance is.
2007-09-02 02:17:49 · answer #1 · answered by Bob D 6 · 1⤊ 0⤋
Wow! What an interesting variety of responses.
Normally, I say pay off the highest interest rate first. But if the interest rate is the same on all cards. It's a no brainer to pay off the smallest one first. Once it's gone, you have more money to slap on the next one. The fewer different payments, the better! It's also very satisfying to pay off a card.
You should really set up a strict budget. Eliminate all the extras -- cell phone, eating out, new clothes, etc. Throw evey extra penny on the credit card debt.
It's going to take you 2 or 3 years to pay off that debt but it will feel so good when you get out from under it.
2007-09-02 05:16:01 · answer #2 · answered by bdancer222 7 · 0⤊ 0⤋
Your husband is wrong. Pay off the lowest balance with all extra payments going to that card first. Then take that payment plus the extra money you were paying on it and tackle the next lowest balance (and so on) until all cards are paid in full. You'll only make a slight dent in each card if you distribute the extra money equally among them - and in the meantime interest continues to accrue on every card....and interest is one of the major things that keeps us in debt.
As you eliminate cards, you eliminate interest and automatically make more of your payment dollars go to principle. (Which is what you want!) So your way is the best and quickest way to do it.
Final thought: The only way this is REALLY going to be successful, is to close out credit card accounts as you go, and live on a cash-only basis with no charges from now on. Living by this simple rule: "If you don't have the money to pay for it, don't buy it", is the only way to TRULY get out of debt!
Wishing you all the best - congratulations on this wonderful goal!
2007-09-02 02:20:36 · answer #3 · answered by CassandraM 6 · 0⤊ 0⤋
The lowest sometimes is the best, since they won't add up any more and won't cause any additional costs. But if the highest sum is really high until it get's all your cash removed so that you can't pay for the other ones any more, you are going to have a hard time getting rid of the others.
2007-09-02 02:14:49 · answer #4 · answered by inesp01 5 · 0⤊ 0⤋
Pay the minimums on all of them except the one with the highest balance (assuming the interest is the same on all) and pay as much as possible on the one with the highest balance.
Once it's paid off apply all of that money along with the minimum to the next card.
Keep doing this until all of them are paid off.
2007-09-02 02:15:22 · answer #5 · answered by mister_galager 5 · 0⤊ 1⤋
Chose it by percentage say X amount of dollars spaced over the cards in relation of % owing highest $ owing recieves more X amount of $...ie. 1000,2000, 5000 left owing and only have $500 to pay towards c/cards, then (8000 /500)=16....Now pay $62.50/ $125.oo / $312.50 respectifully. to clarify pay $62.50 towards the $1000 C/card, pay $125.00 towards the $2000 C/card. and finally $312.50 towards the $5000.00 owing credit card... this is only a reasonable idear,OK. try to understand the logic. good luck.
2007-09-02 02:31:42 · answer #6 · answered by daryl 4 · 0⤊ 0⤋
You are both wrong. It should be done as a percentage of the total debt. For example, if you have cards with $10,000, $6,000, $3,000 and $1,000 balance and want to pay down $1,000 of it you would put 50% ($500) of it on the $10,000 card, 30% ($300) on the $6,000, 15% ($150) on the $3,000 and 5% ($50) on the $1,000.
2007-09-02 02:16:44 · answer #7 · answered by Luv2Answer 7 · 0⤊ 2⤋
you should pay of the highest onesand those with the highest interest.since you aquire more interest on those.
2007-09-02 02:11:17 · answer #8 · answered by rmblnrose311 3 · 1⤊ 0⤋
Mister Galagher is right on!
2007-09-02 02:18:32 · answer #9 · answered by Anonymous · 0⤊ 1⤋