Working out which credit card you should pay off first sounds like a simple enough question. You just pick the one with the lowest APR and pay that first, right?
No so fast.
There's a lot more to figuring out the optimal way to repaying credit cards. First off, credit cards have different interest rates for different types of balances and the APR only relates to purchases. If you have balance transfers, money transfers or other types of balance on the credit card, the interest rates associated with those balances may be much higher than the quoted APR.
I'll walk you through how you should look through your statements and write out each type of balance you have on there along with the annual interest rate that you are paying. You should then pay off the card that has the highest interest rate on ANY part of its balance first.
Once you've cleared that specific balance category, repeat the process and begin paying off the next highest balance on any of your credit cards.
Make sure you continue making at least the minimum payment towards all of your credit cards while you're doing this and only use this calculation method to assess where to pay any money you have on top of those minimum amounts.
There's a few nuances if you have promotional 0% rates. Normally, you should leave those balances alone as you are not paying any interest on them and repay balances where you are currently paying interest. If your 0% is about to expire and you can't shift the balance to another long-term 0% deal, you should consider beginning to repay that balance even before your 0% runs out if the interest rate your balance will begin incurring is higher than others you are currently paying.
Paying off your credit cards is usually one of the first steps to getting out of debt and as the interest is often higher than loans, mortgages or other forms of debt, for many this is the beginning of their debt free journey.
No so fast.
There's a lot more to figuring out the optimal way to repaying credit cards. First off, credit cards have different interest rates for different types of balances and the APR only relates to purchases. If you have balance transfers, money transfers or other types of balance on the credit card, the interest rates associated with those balances may be much higher than the quoted APR.
I'll walk you through how you should look through your statements and write out each type of balance you have on there along with the annual interest rate that you are paying. You should then pay off the card that has the highest interest rate on ANY part of its balance first.
Once you've cleared that specific balance category, repeat the process and begin paying off the next highest balance on any of your credit cards.
Make sure you continue making at least the minimum payment towards all of your credit cards while you're doing this and only use this calculation method to assess where to pay any money you have on top of those minimum amounts.
There's a few nuances if you have promotional 0% rates. Normally, you should leave those balances alone as you are not paying any interest on them and repay balances where you are currently paying interest. If your 0% is about to expire and you can't shift the balance to another long-term 0% deal, you should consider beginning to repay that balance even before your 0% runs out if the interest rate your balance will begin incurring is higher than others you are currently paying.
Paying off your credit cards is usually one of the first steps to getting out of debt and as the interest is often higher than loans, mortgages or other forms of debt, for many this is the beginning of their debt free journey.
If I want to pay my credit cards off which should I pay the highest one or lower one
I have a balance on a credit card that I canceled the interest is 10.24% . Is there any benefit to paying off this cc first as opposed to a card that I still have and the interest rates are relatively equal?
I saw a seminar that pretty much was the opposite of your method.
Pay off your lowest credit card debt first, then use that money to pay off the next lowest balance credit card, then now yo have more money freed up to pay the large credit card debt. While you are doing this, you are also paying all of your credit cards on a monthly basis. The idea is to concentrate on illuminating the smaller debts with larger than normal payments. This way you can see them going down in balance. Watching that balance hit the $300 – $ 500 mark is a pretty site, after they've been in
the $ 8,000 – 11,000 balance box
😬
Great vid man!
I've been doing ↖️↖️↖️business with him for weeks now no red flag at Alli enjoy his company, carding, methods, cc, bank log, he's the most real 💰💰
I've been doing ↖️↖️↖️business with him for weeks now no red flag at Alli enjoy his company, carding, methods, cc, bank log, he's the most real 💰💰
Would have been beneficial to state that even when transferring some debt to a 0% CC, that you still have to make the minimum payments for the 0% offer to stand.
Great video here moneyfox!
I’ve had a large balance on a credit card as you’ve said. Luckily it’s on zero. I do however have to get moving on paying it. This was very informative and should help a ton of people out! 💵 keep up the great work with your videos!