Which Order To Pay Off Credit Cards?

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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mattme34
 
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Location: Penscola, FL

Which Order To Pay Off Credit Cards?

Postby mattme34 » Sat Aug 17, 2013 4:27 pm

Hey all,

Credit cart debt is something that has always confused me a bit. I have 3 different cards with some debt on them and would like to make a sizeable payment.

Credit card #1 is a 8% interest card with about 1.3k of debt on it.
Credit card #2 is an 11 % interest card with 2.1 k on it.
Credit card #3 is a Zero interest for a year card with 2.3k on it (Department store engagement ring).

I've heard different approaches for paying off credit card debt. Some say paying off the highest interest rate one first makes the most financial sense.

Some say paying off the cheapest one first leaves you still more likely to pay off the others as you tend to minimize lesser cards in your mind. The wild card for it is the 0 interest for a year card which at the end of a year will probably be an awful 20% card.

I have 900 dollars to put on to one (or multiple) cards right now. Which order should I pay them off?


Midori
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Postby Midori » Sun Aug 18, 2013 8:58 pm

Which one is the "most maxed"?
Is Card #3 a store card, or an ordinary card?
How much longer do you have for your year's worth of zero interest on Card #3?

randeman
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Postby randeman » Sun Aug 18, 2013 9:29 pm

I think it's a no-brainer: pay off the highest interest card first. Simply because it saves you money.
Cards and Credit lines Acquired:

Escape by Discover (7.75K), Barclay Holland America Visa (7K), Macy's store card (7K), Bloomingdale's store card (2.6K), Citi Custom Credit Line (3.5K), PayPal Smart Connect credit line (2.7K), Chase Freedom Visa (5K), Chase United MileagePlus Visa (5K), Chase Sapphire Preferred Visa (6K), Amazon store card (2.2K), Lord & Taylor store card (550), Nordstrom store card (1500), Gold Delta SkyMiles from American Express (3K), Discover It (6.5K), PayPal Credit Line (1K).

Midori
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Postby Midori » Sun Aug 18, 2013 10:23 pm

Normally, I'd pay off the highest interest, too. It makes the most math sense.
But if he's carrying $1.3k on a $1500 card, I think utilization should at least be considered.
And if his 0% card is going to turn into a 24% card by Thanksgiving, that also makes a difference. :oP

dickey1331
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Postby dickey1331 » Sun Aug 18, 2013 10:49 pm

Also is this 0% interest gonna back charge you interest if you dont pay it off completely or was it a sign up offer when you got the card?
Platinum Delta Skymiles $12,900
Marriott Rewards Premier $12,000
Discover IT $12,000
USAA Cash Rewards $11,000
American Express Blue Cash Preferred $10,000
Chase Sapphire Preferred $6,500
Best Buy $6,000
Chase Freedom $4,500
Zales $4,000
Amazon Prime $4,000

randeman
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Postby randeman » Mon Aug 19, 2013 9:14 am

Midori wrote:Normally, I'd pay off the highest interest, too. It makes the most math sense.
But if he's carrying $1.3k on a $1500 card, I think utilization should at least be considered.
And if his 0% card is going to turn into a 24% card by Thanksgiving, that also makes a difference. :oP


I missed his utilization point. Fair enough.
Cards and Credit lines Acquired:

Escape by Discover (7.75K), Barclay Holland America Visa (7K), Macy's store card (7K), Bloomingdale's store card (2.6K), Citi Custom Credit Line (3.5K), PayPal Smart Connect credit line (2.7K), Chase Freedom Visa (5K), Chase United MileagePlus Visa (5K), Chase Sapphire Preferred Visa (6K), Amazon store card (2.2K), Lord & Taylor store card (550), Nordstrom store card (1500), Gold Delta SkyMiles from American Express (3K), Discover It (6.5K), PayPal Credit Line (1K).

DavidNY
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Postby DavidNY » Mon Aug 19, 2013 10:25 am

You should pay off the highest APR card first unless you may not be able to pay off the jewelry card by Thanksgiving, in which case put the money in a savings account until then.



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