What card do I pay off first?

Question

$2,500 at 0% until 10/08 then 21.99% or
$4,800 at 0% until 4/08 then 10.49%

$2,500 is deferred interest so it keep accumulating. After the teaser rate I'll have to pay back interest.

OK, please look at the teaser rates. They are both 0%. But one ends sooner.

Minimum payment on $2,500 is 0.00 until 10/08
Minimum payment on $4,800 is $70.00

I can afford minimum payments during November and December. In January, I can afford $600-800 per month.

Answer 1

Pay the $70 per month on the $4,800, then in January when you can afford to pay $600-$800 per month, pay the minimum on the $4,800 and $700 per month on the $2,500 for the next 3 1/2 months and you will no longer have the $2,500 debt, then take the same $700 per month and add it to the $70 per month and pay it on the $4,800 balance and that will be paid off in the next 6 months.

Answer 2

Even if you decide to focus on paying one off first - KEEP MAKING AT LEAST THE MINIMUM ON BOTH CARDS... if you are late or miss a payment - that often cancels the teaser rate immediately and often you have to pay the interest that accumulated during the teaser.

Pay off the lower card first, the company has no chance of making money off you if you have a $0 balance so they may offer anotehr teaser rate on balance transfers from other cards.

As to the higher rate card, Once your teaser is over if you still have a balance try calling your credit card company and tell them you are considering changing companies becuase their rate is too high is their anything they can do? It helps you can give them specific rates others offer (and not their teaser rates) . Some will match the rate or at least drop your rate. I had a company go from 21.9% to 13.9% you do need to have a good record of on time payments for them to consider this.

Answer 3

You don't provide enough information. What's the minimum payment, and how much can you afford to pay each month?

But based on what you say here, and assuming you can afford the payments, pay off the lower balance account first. Put every spare nickel you have towards this one. That means that you're going to be sending them at least $300 each month.

Otherwise, once that one hits September 2008, the interest charge will bleed you dry. Make the minimum payment on the $4,800 account until the other one is paid off. Then put every penny you can towards that one.

When you pay the first one off, ask them IN WRITING to close the account, and to notify the credit reporting agencies that the account is paid off and closed. It has to be in writing, or they may ignore the request. Be sure you close this account - that interest rate is obscene.

Answer 4

I would pay the minimum payment each month on the $4800 card and as much as I could afford each month on the $2500 card until 04/08. Then I would pay the minimum on the $2500 card and as much as I could afford on the $4800 card until 10/08. Then I would go back to paying the minimum on the $4800 card and as much as I could afford on the $2500 card until it is completely paid off, then basically throw as much spare cash as you can afford at the card thats left.

I know people have said that you should pay off the $2500 one first but I think that you should make the most of the fact that you have another 11 months interest free to go on that card, whereas you will be paying interest on the other card from 04/08.

Answer 5

highest interest. and see about transfering balance to a new card with introducory rate, then cancel the old card. You will have a credit report showing a cleared card and a new card with another good payment record. Hopefully you still have a good payment record on the other cards. When one is low enough, transfer the whole balance to the other card, sse if you can pay it faster then. The total amount of your debt is what is important until 04/08

Answer 6

Pay 75% of the total amount you want to pay towards the higher interest rate, and 25% towards the lower interest rate. The lower interest rate ends sooner than the other one, so you do not want to be stuck not paying on time. You also don't want to keep the higher interest rate on, so distribute them in a 3:1 ratio.

Answer 7

You pay $4800 because you have to pay $504 interest for 6monhs from 4/08 to 10/08. by postponing payment of 2500 you are not loosing anything

Answer 8

Ditto....pay off the credit card with the highest interest rate first. You also may want to negotiate for a lower interest rate than 21.99% which is very high.

Answer 9

Always pay off the lowest amount first ($2500). In fact, if you can, make higher payments (not minimum) when the bill comes. Prioritize your lowest to highest payoffs.

Answer 10

The card with the highest interest rate.