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pjt212301
LIF Adult
Member since 7/12 1213 total posts
Name:
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Credit Card Question
Let's say that you were given $10,000 and you had credit card balances, which would you pay off with that $10K?
Option 1 - three credit cards with $4k, $4k and $2k balance
or
Option 2 - one credit card with $10k balance
I know there must be some school of thought which makes one better than the other
Edited to say - all things equal - interest rate, debt ratio on the card, length of time with the card...
Message edited 11/9/2022 8:23:26 AM.
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Posted 11/9/22 8:05 AM  |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Credit Card Question
This seems too easy of an answer so I must be missing something… but the ones with the highest interest rates should be the first to go. I don’t think the amount of cc’s matters bc it all evens out to the same debt ratio.
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| Posted 11/9/22 8:12 AM |
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lmcmcl
LIF Toddler
Member since 2/15 483 total posts
Name:
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Credit Card Question
The big question is what are the interest rates of each card? Obviously, if they are not equal, pay off the one with the highest interest rate.
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| Posted 11/9/22 8:14 AM |
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thewinterone
You make me happy
Member since 5/05 2473 total posts
Name:
cause you are gray.
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Re: Credit Card Question
Highest interest first and work your way down.
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| Posted 11/9/22 8:17 AM |
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nycbuslady
LIF Adult
Member since 9/15 1063 total posts
Name:
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Credit Card Question
I'm assuming you have $20K in debt and can pay off half of it. Obviously, you would pay the one with the highest interest rate first. Assuming they're all equal, I would pay off th $10K one first. This way, when the bills come, you see that big chunck gone. It feels less when the other bills are smaller. Then, you can chip away at the other ones.
In the end, you have to see what you percieve at better -- only some "small" balances, or just one "big" balance left to pay.
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| Posted 11/9/22 8:36 AM |
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StaceyWill
It's a girl!!!
Member since 6/10 21536 total posts
Name:
Stacey
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Re: Credit Card Question
Option 2 - I'd pay the highest balance first.
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| Posted 11/9/22 8:54 AM |
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MaZz
* Lovin my baby girl!!! *
Member since 2/09 6243 total posts
Name:
Gina
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Credit Card Question
With all things equal, I’d get rid of the 3… just because it’s easier to keep track of 1 cc with a balance as opposed to 3.
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| Posted 11/11/22 7:53 AM |
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RainyDay
LIF Adult
Member since 6/15 3986 total posts
Name:
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Re: Credit Card Question
Posted by MaZz
With all things equal, I’d get rid of the 3… just because it’s easier to keep track of 1 cc with a balance as opposed to 3.
If interest rates are all similar this.
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| Posted 11/11/22 11:55 AM |
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Pomegranate5
LIF Adult
Member since 2/11 4798 total posts
Name:
Pomegranate5
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Re: Credit Card Question
Posted by RainyDay
Posted by MaZz
With all things equal, I’d get rid of the 3… just because it’s easier to keep track of 1 cc with a balance as opposed to 3.
If interest rates are all similar this.
Same. I'd rather have just one bill to pay every month.
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| Posted 11/11/22 12:09 PM |
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lululu
LIF Adult
Member since 7/05 9508 total posts
Name:
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Re: Credit Card Question
Posted by Pomegranate5
Posted by RainyDay
Posted by MaZz
With all things equal, I’d get rid of the 3… just because it’s easier to keep track of 1 cc with a balance as opposed to 3.
If interest rates are all similar this.
Same. I'd rather have just one bill to pay every month.
Same, and I would cut up the three cards so that I could no longer use them.
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| Posted 11/11/22 4:17 PM |
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aliwnec10
mom of 3 boys
Member since 4/06 11426 total posts
Name:
Ali
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Re: Credit Card Question
I'd get rid of the 3 if there are no differences at all.
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| Posted 11/13/22 8:39 AM |
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mommy2be716
LIF Adult
Member since 1/16 2921 total posts
Name:
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Credit Card Question
if interest rate is the same, then get rid of the 10k balance first. the higher the balance, the higher the amount of interest you're adding each month
if interest is like 10% on a 10k bill, that's alot getting added each month. but that same percentage on a 4k bill is far less. get rid of the larger balance, and work on paying down those smaller balances ASAP (or, once you pay off the larger card look to consolidate the remaining debt onto one card with a low apr rate so you have a change to pay it down quicker).
Message edited 11/13/2022 1:51:12 PM.
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| Posted 11/13/22 1:48 PM |
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Lucky09
2017!
Member since 1/06 7535 total posts
Name:
DW
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Credit Card Question
Your credit score is partially impacted by % utilization of cards. So if you have used 90% of the limit of the card with $10,000 on it, your credit score is taking a bigger hit. Therefore I would pay that card off first. I think I have read that you want your credit utilization to be no more than ~20-30% of each card's limit if you are carrying a balance. This article explains it better than I have :) https://www.nerdwallet.com/article/finance/30-percent-ideal-credit-utilization-ratio-rule
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| Posted 11/13/22 3:23 PM |
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lululu
LIF Adult
Member since 7/05 9508 total posts
Name:
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Re: Credit Card Question
Posted by mommy2be716
if interest rate is the same, then get rid of the 10k balance first. the higher the balance, the higher the amount of interest you're adding each month
if interest is like 10% on a 10k bill, that's alot getting added each month. but that same percentage on a 4k bill is far less. get rid of the larger balance, and work on paying down those smaller balances ASAP (or, once you pay off the larger card look to consolidate the remaining debt onto one card with a low apr rate so you have a change to pay it down quicker).
If the interest rates are the same it doesn't matter if you have it on one card or 10. For example, $10k with 10% interest is $1000 interest. Ten card with $1000 each is $100 for each card. So 10x100=1000.
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| Posted 11/14/22 7:56 AM |
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lpg21
LIF Infant
Member since 9/21 341 total posts
Name:
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Re: Credit Card Question
The one with the highest balance, since it will accrue more interest.
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| Posted 11/14/22 3:22 PM |
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lululu
LIF Adult
Member since 7/05 9508 total posts
Name:
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Re: Credit Card Question
Posted by lpg21
The one with the highest balance, since it will accrue more interest.
Actually this is not true. See my example above. If the interest rates are the same it doesn't matter if you have it all on one card or spread out over 10.
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| Posted 11/15/22 7:20 AM |
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