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iNTeNSeBLue98
12-16-2008, 11:10 AM
How would you go about it?
Would you pay off the lowest balance or the highest interest card first?

prncess674
12-16-2008, 11:16 AM
Have you tried consolidating your debt onto your lower interest rate cards. Department store and retail store cards can carry interest rates of 20-23%. Then you aren't spreading your payments around on minimum payments. Also when you only have one or two payments you are less likely to miss one.

reginaastralis
12-16-2008, 11:17 AM
In my debt paydown I am working on right now, I have the smallest balance in line first. The way I see it, and most of the financial "gurus" I've read is that you will get momentum from paying off a bill. It's nice to see them go.

It's been working so far, fingers crossed!

dtrusty
12-16-2008, 11:31 AM
Technically, you are better off paying off higher interest cards first. It'll save you money in the long run. However, I paid off $20000 worth of cc debt about 5 years ago. I did it by doing a few things. I called my cc companies and requested lower rates, which they gave me. I then opened a new card that had a 12 month intro rate at %0 and transfered as much as possible to that card. (Helped a ton) I'm not sure what they are offering right now, but it's worth a look. Alot of card companies will try to charge you a transfer fee, but I was able to talk them out of that as well. YMMV. I, personally chose to pay off lower balance cards first because it was a mental victory to see the number of cards with a balance dwindel. Good luck, it's well worth it.

duketennisgal
12-16-2008, 12:06 PM
I'm choosing to pay off the lowest balances first. I know that it costs me more in the long run because some of the higher balance cards have higher interest rates but the moral victory is worth more to me, seeing those balances dissappear is a great feeling.

wall*e2008
12-16-2008, 12:09 PM
Highest interest.

prncess674
12-16-2008, 12:13 PM
I really don't understand this "feel good" factor of debt. Total it all up and consider it one big monkey on your back, start picking off the leeches that are sucking you more than others. Really the best thing to do is to consolidate to one or two low interest cards if you can. It is one thing if you can't get a lower interest rate card to start paying off all the small balances but the first most informed decision it to get the overall rate down, it is just solid math.


If you consolidate you get your perceived feel good factor since you won't be paying as many little transactions per month.

iNTeNSeBLue98
12-16-2008, 12:31 PM
Have you tried consolidating your debt onto your lower interest rate cards. Department store and retail store cards can carry interest rates of 20-23%. Then you aren't spreading your payments around on minimum payments. Also when you only have one or two payments you are less likely to miss one.

I have thought about debt consolidation, but we took out a small loan in June to buy a hot water heater, range and make two repairs to the car. DH wanted to pay off his Snap On with lower interest, but we were hesitant on applying for another loan so soon - but in a quick calculation of all the CC debt, the small loan and the Snap On account we could save at least $100 a month depending on the term and the interest. I just completed the application through the credit union. Cross your fingers for us. :goodvibes

prncess674
12-16-2008, 12:43 PM
I have thought about debt consolidation, but we took out a small loan in June to buy a hot water heater, range and make two repairs to the car. DH wanted to pay off his Snap On with lower interest, but we were hesitant on applying for another loan so soon - but in a quick calculation of all the CC debt, the small loan and the Snap On account we could save at least $100 a month depending on the term and the interest. I just completed the application through the credit union. Cross your fingers for us. :goodvibesDo you already have a bank issued credit card? Many of them allow you to transfer balances to a current account thus not opening more accounts. You don't have to open a consolidation loan, just move all your high interest debt to the lower interest card/account.

a1tinkfans
12-16-2008, 01:05 PM
How would you go about it?
Would you pay off the lowest balance or the highest interest card first?

Highest interest first, though some feel the "need" to see a card disappear to SEE their progress so they'll go to the least amount and pay it off first even if interest rate is lower.
Personally it just repeats a pattern in my mind, Instant gratification rather than good sound fiscal responsibility.
Don't believe in buying what you cant afford or Over-buying whether that be cars or homes or vacation homes....I think thats why so many people are in trouble in the first place.

BEST of LUCK to you! It will be a great feeling to be debt free!!! I think its great that you have a plan of attack.

Golf4food
12-16-2008, 01:15 PM
Higher interest is the ONLY way that makes any FINANCIAL sense. The whole "pay the smallest first" to "build momentum" is crap. If you need that sort of motivation to pay off debt you need to rethink your financial priorities. Those higher interest cards might be costing you a lot of extra money each month and it will just take you that much longer to get it all paid off in the end. If you truly want to get out of debt FASTER, you pay off the highest interest first. Not to mention that interest accumulates in smaller amounts on lower balances anyway. If you are paying $50 per month in interest on one card and only $20 in interest on another with a lower interest rate, why would you willingly accept losing that extra $30 a month? Saving $30 would make me feel better than seeing the smaller amount go away faster. YMMV.

ThreeMusketeers
12-16-2008, 01:15 PM
Highest interest first, though some feel the "need" to see a card disappear to SEE their progress so they'll go to the least amount and pay it off first even if interest rate is lower.
Personally it just repeats a pattern in my mind, Instant gratification rather than good sound fiscal responsibility.
Don't believe in buying what you cant afford or Over-buying whether that be cars or homes or vacation homes....I think thats why so many people are in trouble in the first place.

BEST of LUCK to you! It will be a great feeling to be debt free!!! I think its great that you have a plan of attack.

Don't you think that at times, people don't USE credit cards b/c they think they need that new whatever..

ALOT of times, people use them b/c they are forced into a situation where they must, or whatever bill doesn't get paid.

DL55
12-16-2008, 01:19 PM
Paying the highest interest rate would save $ in the long run. But I understand the feeling of seeing the cards paid off. If looking at the amount of debt feels overwhelming then paying off the lowest amount will be a first step. "A trip of a 1000 miles starts with one step". After you have paid off one or two of the lower amounts you can switch to the highest interest rate. No one has said you have to stick to one method! :thumbsup2

disneysteve
12-16-2008, 01:21 PM
Don't you think that at times, people don't USE credit cards b/c they think they need that new whatever..

ALOT of times, people use them b/c they are forced into a situation where they must, or whatever bill doesn't get paid.

That's true. The debt could be from medical bills or some other unforeseen emergency. But that doesn't change the fact that the best way to repay them is highest rate to lowest. That will get you debt-free the fastest and at the lowest total cost.

ThreeMusketeers
12-16-2008, 01:26 PM
That's true. The debt could be from medical bills or some other unforeseen emergency. But that doesn't change the fact that the best way to repay them is highest rate to lowest. That will get you debt-free the fastest and at the lowest total cost.


It's annoying to me, that people think that those with cc debt are uncontrolable spending monsters.

My husband and I never WANTED cc debt. And we went through so many years not having to worry about it. But :scared1: happens and sometimes, ya gotta do what ya gotta do.

But I agree..paying high off first is the way to go. Also, don't underestimate your own negotiating ability's. Call the CC company yourself and negotiate interest rates.

secretpantssam
12-16-2008, 01:29 PM
I would pay off the high interest card first to save money.

monorailsilver
12-16-2008, 01:36 PM
I often wonder this too.

Lets see we had 4 cc's & now we have 3 & it feels better to not have that extra payment.

We did think about it since the one we paid off was from Sleepy's & 0% interest for at least another year or so but it was the lowest & now it is history.

I am working on the next lowest next & I am putting all my extra money I have towards that & then I will work at the big guns & figure out which to pay off first.

Basically I am looking at lowest to highest. Because I know my payments on the lower interest cards will go farther then on the higher interest cards & I can knock them off earlier then the cc's with the higher debt on them.

My goal is 2 years & I know it can be done. DH doesn't think so but I do & sooner if possible.

disneysteve
12-16-2008, 02:33 PM
It's annoying to me, that people think that those with cc debt are uncontrolable spending monsters.
Most of the stories we hear and read are due to a spending issue but I have read that the number one cause for personal bankruptcy is medical bills.

don't underestimate your own negotiating ability's. Call the CC company yourself and negotiate interest rates.

Very good advice. All it takes is a phonecall to each CC company and ask if they would lower your rate. The worst they can do is say on. Even if they drop it 1%, you've saved money.

disneysteve
12-16-2008, 02:45 PM
Basically I am looking at lowest to highest. Because I know my payments on the lower interest cards will go farther then on the higher interest cards & I can knock them off earlier then the cc's with the higher debt on them.

That doesn't actually make sense. Paying more to the lower interest card causes you to pay more interest on the higher rate card. Your payment would "go farther" if you applied it to the higher interest rate debt first and would get you out of debt sooner and at a lower overall cost.

monorailsilver
12-16-2008, 07:32 PM
That doesn't actually make sense. Paying more to the lower interest card causes you to pay more interest on the higher rate card. Your payment would "go farther" if you applied it to the higher interest rate debt first and would get you out of debt sooner and at a lower overall cost.

Well not the way I see it.

If my minimum payment on one card is $250 & yet that has higher interest rate & I have more money on that card & another card my minimum payment is around $200 & I have a bit less money on that card, I can swing paying more on that $200 payment then on the $250 one & see my debt go down.

I can't explain it but it works for me.

Yes I know I can apply the same extra on the higher interest rate card with more money that I owe but in my eyes I see the lower one dropping much quicker if I do that.

Basically right now I am paying off the card that has the least amount on it. I am not looking at the finance charge (OK I am). I know if I can attempt to double my payments on that card, I will pay it off that much quicker.

cpdrn7
12-16-2008, 08:17 PM
My thought is whatever works for you and your situation is best for you.
I have been paying the lowest amount owed down, first and that works for me.
I used to have five cards with balances, now I have two...it is so much easier to remember what the due dates are now...rather then when I had five due dates!
Although, the interest rates were close in range too.

minnie1928
12-16-2008, 08:41 PM
Well not the way I see it.

If my minimum payment on one card is $250 & yet that has higher interest rate & I have more money on that card & another card my minimum payment is around $200 & I have a bit less money on that card, I can swing paying more on that $200 payment then on the $250 one & see my debt go down.

I can't explain it but it works for me.

Yes I know I can apply the same extra on the higher interest rate card with more money that I owe but in my eyes I see the lower one dropping much quicker if I do that.

Basically right now I am paying off the card that has the least amount on it. I am not looking at the finance charge (OK I am). I know if I can attempt to double my payments on that card, I will pay it off that much quicker.

I understand what you are saying. It is a bit "bass ackwards" though. You will end up paying more in interest this way, but if it works for you then:thumbsup2 .

However, with that said I think the most important thing in this conversation is that you are paying down the balances. Sometimes I think this fact gets lost in the whole "higher rate vs. lower balance" conversation. What really matters is at the end of the day/week/month/year you will owe less money than you did the day/week/month/year before...and that's the most important thing.

prncess674
12-16-2008, 08:44 PM
I understand what you are saying. It is a bit "bass ackwards" though.Agree! Any sound financial planner would tell you to pay the minimun at least on all cards, but any extra should go towards the highest interest rate cards. It doesn't all "seem" right, but if you do the math it DOES work out.

As I said before consolidate your debt as much as possible on the lowest interest rate cards. Transfer as much of the high rate card balances as much as possible.

goodhartc
12-16-2008, 11:50 PM
According to Dave Ramsey you should do the "Debt Snowball" by paying off the smallest balances first. You do get some mental benefit from it. Good Luck!!

rluey29
12-17-2008, 12:18 AM
Here's my question about all this. I would like to call the companies to renegotiate a lower rate, but I've attempted that before and they told me they would have to have my permission to check my credit before they even thought about it. I didn't know if it was smart since that might bring down my credit score. Shouldn't they be able to just look at my payment history and whether or not I'm a valued customer to be able to figure out if they're going to lower my rate?

Have any of you gotten a lower rate just by asking and without involving the checking of your credit, and if so, how did you do it?

minnie1928
12-17-2008, 06:54 AM
Here's my question about all this. I would like to call the companies to renegotiate a lower rate, but I've attempted that before and they told me they would have to have my permission to check my credit before they even thought about it. I didn't know if it was smart since that might bring down my credit score. Shouldn't they be able to just look at my payment history and whether or not I'm a valued customer to be able to figure out if they're going to lower my rate?

Have any of you gotten a lower rate just by asking and without involving the checking of your credit, and if so, how did you do it?

Your credit can be pulled one of two ways. A hard pull is when you apply for new credit and this will ding your score a few points. A soft pull will not ding your credit. A soft pull is what occurs when you inquire on your own score. Ask them if they are doing a hard or soft pull, hopefully they will know the difference.

prncess674
12-17-2008, 07:53 AM
According to Dave Ramsey you should do the "Debt Snowball" by paying off the smallest balances first. You do get some mental benefit from it. Good Luck!!
Call me crazy, I will take a real MONETARY benefit than a mental visit.
Here's my question about all this. I would like to call the companies to renegotiate a lower rate, but I've attempted that before and they told me they would have to have my permission to check my credit before they even thought about it. I didn't know if it was smart since that might bring down my credit score. Shouldn't they be able to just look at my payment history and whether or not I'm a valued customer to be able to figure out if they're going to lower my rate?

Have any of you gotten a lower rate just by asking and without involving the checking of your credit, and if so, how did you do it?Before inquiring on the rates can you move balances off the highest rate cards to lower rate cards?