sd95 Posted January 20, 2017 Share Posted January 20, 2017 Have $500 to pay one first and wanted to ask which one I should pay first The one that I owe $ 700 or $2900? Thanks a lot Link to comment
Jibralta Posted January 20, 2017 Share Posted January 20, 2017 Take your interest rate into account with the principal balance. Pay the one that will accrue the most interest first. Link to comment
mustlovedogs Posted January 20, 2017 Share Posted January 20, 2017 So to expand on what Jibralta said - don't pay the one that merely has the highest percent rate. Take each cards percentage, divide it by 12, and multiply by your balance. Pay the one that is the higher number. Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 Take your interest rate into account with the principal balance. Pay the one that will accrue the most interest first. Ok that's what I will do, the highest one has 24.99% interest rate and the lowest one has 7.24% interest rate. So I will work to bring down that high debt. Thanks Link to comment
mustlovedogs Posted January 20, 2017 Share Posted January 20, 2017 Oh wow that is really high. It may be worth not using that card much if you can't pay it off every month Link to comment
notalady Posted January 20, 2017 Share Posted January 20, 2017 Oh wow that is really high. It may be worth not using that card much if you can't pay it off every month Indeed, pay the higher interest rate ones first. I don't know about where you are OP, but where I am, credit card companies offer balance transfers for 0% or really low interest rate for a period of 6-18 months if you get a new card with them (or sometimes even existing cards offer this kind of promotions), I would take advantage of those and pay it all off in the nil / low interest rate period. Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 Oh wow that is really high. It may be worth not using that card much if you can't pay it off every month That card has been frozen since November and won't be used until the debt is completely gone lol Link to comment
mustlovedogs Posted January 20, 2017 Share Posted January 20, 2017 That card has been frozen since November and won't be used until the debt is completely gone lol Good call! My highest card is a "student" card and I think it's 17%... Be wary of closing it as it can hurt your credit score. If it's your oldest it will drop your score. Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 Indeed, pay the higher interest rate ones first. I don't know about where you are OP, but where I am, credit card companies offer balance transfers for 0% or really low interest rate for a period of 6-18 months if you get a new card with them (or sometimes even existing cards offer this kind of promotions), I would take advantage of those and pay it all off in the nil / low interest rate period. I tried to do that but I wasn't approved. I think it was capital one Link to comment
notalady Posted January 20, 2017 Share Posted January 20, 2017 I tried to do that but I wasn't approved. I think it was capital one Can you transfer balance from your 24.99% card to your 7.24% card? Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 Can you transfer balance from your 24.99% card to your 7.24% card? I never checked but I don't think so. Wouldn't my balance have to be more than $2900 on the other card? Link to comment
abitbroken Posted January 20, 2017 Share Posted January 20, 2017 Pay off the $700. Keep the card open with no balance for a little while until you pay down at least half of the other debt. Pay a certain amount every week or month. I found that if the regular payment was $25, i paid $10 every week on it on the website. If it was $50, i paid $20 a week. Obviously if you can do more, do it. Every time you get a tax return, shave some money off gift money and get used to paying cash. The reason why i say this is that its going to take a long time to pay off the $2900 and in the meantime you will feel like you are never getting ahead while the $700 debt and $2900 both still climb. having the $700 over and done will give you a boost of accomplishment to move forward. If you can pay the lower debt off in two months, 6 months, etc, its better than taking 2-3 years to pay off the $2900 and then starting the $700 I think Dave Ramsey always also says start off with the smallest debt and close it - get it over with. It makes a lot of sense. Link to comment
abitbroken Posted January 20, 2017 Share Posted January 20, 2017 If you have $500 and pay the $700 one, your monthly payments will go down considerably, maybe to $25 per month. If you pay $25 per week instead, you'll be done completely in maybe 8-10 weeks after you make the payment, but have that safety net of the low monthly payment if you are in a bind. If you pay the higher one, and can only make minimum payments after that, in a year, your $500 payment will get eaten up - it may be like you only as if you paid it down $300-400 instead. That's why i am saying what i am saying Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 If you have $500 and pay the $700 one, your monthly payments will go down considerably, maybe to $25 per month. If you pay $25 per week instead, you'll be done completely in maybe 8-10 weeks after you make the payment, but have that safety net of the low monthly payment if you are in a bind. If you pay the higher one, and can only make minimum payments after that, in a year, your $500 payment will get eaten up - it may be like you only as if you paid it down $300-400 instead. That's why i am saying what i am saying I;m thinking I should be completely out of debt by 6/30. First goal is to get the $2900 under $2000 before March 30th Link to comment
Wiseman2 Posted January 20, 2017 Share Posted January 20, 2017 Can you transfer the balance to a promotional low interest card, then pay it off quickly? Or get a credit union or bank loan at a lower rate? At 24.99% compounded on that balance you'll never dig out. They may keep it under 25% to circumvent usury and loan sharking laws. Speak to your banker and accountant. Ok that's what I will do, the highest one has 24.99% interest rate and the lowest one has 7.24% interest rate. Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 Can you transfer the balance to a promotional low interest card, then pay it off quickly? Or get a credit union or bank loan at a lower rate? At 24.99% compounded on that balance you'll never dig out. They may keep it under 25% to circumvent usury and loan sharking laws. Speak to your banker and accountant. I made a decision not to date until the summer time since it can be costly. So I can probably pay 400-500 until July and be done with it. Plus I don't have pay rent in June which frees up more money for me to bring the debt down Link to comment
abitbroken Posted January 20, 2017 Share Posted January 20, 2017 I;m thinking I should be completely out of debt by 6/30. First goal is to get the $2900 under $2000 before March 30th But in that time you also can have the one card free and clear paid off and cut up into little pieces, plus $200 down on the $2900 card. I have a friend who had a high balance credit card that as soon as she paid off a little, they also lowered her credit line. Therefore, it hurt her credit because she had less credit available on the card and also one little thing like a yearly fee, a raise in the interest rate could put her over her balance limit. Just my two cents from years of experience. Do it how you like, but that's what I would do. Link to comment
sd95 Posted January 20, 2017 Author Share Posted January 20, 2017 But in that time you also can have the one card free and clear paid off and cut up into little pieces, plus $200 down on the $2900 card. I have a friend who had a high balance credit card that as soon as she paid off a little, they also lowered her credit line. Therefore, it hurt her credit because she had less credit available on the card and also one little thing like a yearly fee, a raise in the interest rate could put her over her balance limit. Just my two cents from years of experience. Do it how you like, but that's what I would do. No I don't plan to cut them up. I'm a responsible spender I just got in debt because I lost my job and had to pay rent with it for 3 months and bills Link to comment
Jibralta Posted January 21, 2017 Share Posted January 21, 2017 Ok that's what I will do, the highest one has 24.99% interest rate and the lowest one has 7.24% interest rate. So I will work to bring down that high debt. Thanks Wow, your high card charges you $60/month in interest @ the $2900 balance, whereas your low card charges only $4/mo @ the $700 balance. Yeah, pay down that high one as quickly as you can!! Link to comment
Wiseman2 Posted January 21, 2017 Share Posted January 21, 2017 If you’re borrowing money (using a credit card, for example), they quote you an APR, which is the simple rate. So, even though it’s compounded monthly and thus the growth of the balance in a year will be more than that rate, they advertise the lower simple rate. Let’s look at an example: let’s say you borrow $3,000 on a credit card at a 24.99% APR. At first glance, the interest rate seems to indicate that you would have to pay $749.70 extra after a year, but that’s just not the case. If the credit card compounds monthly, you’ll actually owe a total of $3,841.82 – an extra $92.12. It’s even worse if they compound more often than monthly. Link to comment
sd95 Posted January 21, 2017 Author Share Posted January 21, 2017 Wow, your high card charges you $60/month in interest @ the $2900 balance, whereas your low card charges only $4/mo @ the $700 balance. Yeah, pay down that high one as quickly as you can!! No it's $40 a month interest every 1st of the month Link to comment
Jibralta Posted January 21, 2017 Share Posted January 21, 2017 If you’re borrowing money (using a credit card, for example), they quote you an APR, which is the simple rate. So, even though it’s compounded monthly and thus the growth of the balance in a year will be more than that rate, they advertise the lower simple rate. Let’s look at an example: let’s say you borrow $3,000 on a credit card at a 24.99% APR. At first glance, the interest rate seems to indicate that you would have to pay $749.70 extra after a year, but that’s just not the case. If the credit card compounds monthly, you’ll actually owe a total of $3,841.82 – an extra $92.12. It’s even worse if they compound more often than monthly. You are talking about the APY (normalization of compounding interest). Yes, depending on whether his payments are first applied to principal or interest, some portion of the interest (if not all of it) will compound. Link to comment
Jibralta Posted January 21, 2017 Share Posted January 21, 2017 No it's $40 a month interest every 1st of the month How so? 12345 Link to comment
sd95 Posted January 21, 2017 Author Share Posted January 21, 2017 How so? 12345 That's what I am charged every first of the month based on the interest. Link to comment
sd95 Posted January 21, 2017 Author Share Posted January 21, 2017 How so? 12345 My bad, it's 16.49% interest which charges me $41.69 a month. 24.99% is the interest on my Bed Mattress Store credit card which I paid off last summer Link to comment
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