Pay credit card first or collections?

Question

I have a credit card for about $512.00 at a 22% interest rate and an outstanding balance in collections for $750.00. Which one should I pay off first and why??

Answer 1

What a question!

Well, if I were you, I would maintain my credit card monthly minimums and start negotiating a repayment plan which is affordable to you for your $750 incollections.

Obtain a signed agreement from the collections agency stating the agreed repayment arrangement ie: $45 per month for 18mths when you both agree to a plan.

Next, make sure you pay as per the plan you agreed to and put any extra you have weekly to your credit card and start decreasing it as fast as fast possible.

When you get to $0 as an outstanding balance due for payment on your credit, then start paying off the collections bill ata higher rate.

If anything happens, you will have your credit card for back up if you do things in this order!

Try not to use it in future except for emergeancies or as a convenience purchase which you can repay straight away.

Best of luck!

Answer 2

Send the collections company a few dollars and pay off the credit card as soon as you can. They usually charge the most interest and fees. Talk to the collections agency see if they will settle for less. They keep a portion of what they collect. They'd rather collect 75% right away or even in installments than collect the full amount if they have to hound you for 2-3 years to get it.

Answer 3

pay off the credit card first. the one already in collections has already hurt your credit score and nothing can be done about that. don't allow the second loan to go to collections and further hurt your future ability to obtain a loan or mortgage

Answer 4

Andy is correct....Focus on what is current/non-defaulted....If you have the money pay that off first.....

FYI: collection agencies buy debt for pennies on the dollar....your debt of $750 might have been purchased for as little as $50. Get WRITTEN agreements first prior to paying any collection agency.

Answer 5

i would pay the smaller amount first. because its a little bit easier. and then you can get it out of the way! and tackle the bigger one!!! and cut up your credit card! nothing comes good to those things!!! i hate them now! i owe 300$ to capitol one...its gay.. but my bf racked it up for his college classes, stuff he needed for the computer.
or pay a little bit of each for a couple of months, so your not totally broke. and then pay the rest off of the credit card. that way you will gain a good credit score!!