Which credit card would be best to pay off first?

Question

#1 limit 450.00 = balance 398.00 w/fixed APR 23.99 annual fee/12 = 5.75 monthly and opened 03/06.

#2 limit 850.00 = balance 788.02 w/APR 29.99 annual fee/12 = 10.95 monthly ( high apr went over limit 2 months ago ) and opened 11/06

Which one is best to pay off first?
A) card 1 - lowest amount and can be paid off this month. ( Thanks mom and dad for the 400.00 loan ) Called company yesterday. They waived monthly annual fee for 3 months. APR is fixed. Once paid off. Take extra payments that normally would pay card 1 and apply it to card 2.

card 2 - pay 400 towards the current balance, continue to focus extra payments to card 2 and pay 5.00 over minimum of card 1 & 3 until card 2 is paid for and closed. I know closing will hurt my score some. However, I want to get away from multiple annual fees.

My idea is. Once #2 closed and #1 paid in full but left open. Work on #3 limit is 750 with 716.67 balance.APR 27.99 & Annual fee billed yearly 59.00

Thank you!

Answer 1

Pay off #1 first. Then throw everything you can squeeze out of your budget at #2 to pay it off faster. Give up the extras till you get the credit card debt paid off.

It looks like you are paying a monthly fee? If that's the case, get rid of both those cards and get one without a fee -- get the new card before you close the old ones.

What every you do, do NOT follow the advice to split your payment and pay twice. The savings in interest is pennies but the likelihood of only have one of those half payments get posted to your account within the billing period, is absolute. At least twice a year you will get hit with late fees for only have half a payment post. The half payment idea does not work for credit cards because the billing period is 25 or 28 days, not monthly.

Answer 2

I would do the option one that you have. Then you have 1 card that you are no longer using! and it is paid off completely! Still make the monthly payments on card 2, however, so that that one is decreased some also, and no late payment fees. Another thing you could do is look at finding a 0% interest card, you know, one of those cards you get in the mail with 0% intrest for 6 months. Do a balance transfer from your card 2 to new card. Then you have 6 months to finish paying it off with no intrest incurred. That is what I would do. And seriously. I would not cancel the other cards, it can really hurt your credit, which you already know. Just put them in a safe or something. Then, if you really have to have money, I mean badly, like stuck in bed, can't work for 2 months, you have them there to help out.

Also, check out Suze Orman's book, Young, Fabulous, and Broke. It is a really good book for those of us going or just getting out of school!

Thanks

Rachar

Answer 3

i latterly did that. My Washington Mutual credit card has 0% interest on stability transfers for a 300 and sixty 5 days. there's a three% pass fee (one time in basic terms). I transferred balances from 2 greater interest card and a branch shop card, and that i'm paying that off. The credit card companies gives you you assessments for this purpose. in case you are attempting this, be certain you do not make any purchases with the cardboard, because of the fact the purchases are paid off final and the interest will assemble.

Answer 4

Ordinarily, you would want to start paying off the one with the highest APR and balance. However, since you have $400.00 and the balance on card #1 is $398, pay this card off first. The reason is that it will give you a more immediate sense of accomplishement in that you are eating away at your debt load and you will feel good about it. Then tackle card #2.

Answer 5

ALWAYS!. Pay the card with the highest interest 1st. In doing so your montly interest cummulated (both cards) will decrease. i.e. More of your money will go toward your principal rather than your interest.

Also, make payments bi-monthly. Interest is accrued daily. Take your normal payment and divide it in 2. This will lower your monthly interest charge.

Or, Transfer balances to a 0%apr for 12 months. Take the total and divide it by 12 and that has to be you monthly pymt. Do not use the card.

Answer 6

Keep one card for gas and food and make sure those amounts are paid off entirely each month and pay down the principle.

Pay off the card with the highest rate first no matter what the lowest balance is. Then concentrate on the next highest one. Shred the two but don't close the accounts, as this is bad for your credit report.

Answer 7

After making the minimum payments put ALL extra $$$ to the highest interest debt .
Then work your way down the debt list , always getting rid of highest % .

And Never waste $$$$ on a card with an annual fee.

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Answer 8

whichever one has the higher apr, it looks like that is #2

then, cut your cards up and wait until you get a job

Answer 9

They say to start with the lowest debt you have.