What is the best way to pay off credit cards?
Between my husband and I we have 10 credit cards…..We don’t use them all but have a lot of debt between them. I have tried the consolidate route and that bit me in the tail so I need a good idea to pay off asap. I have been doing the “snowball” method but still seem to be going nowhere. I have been focusing on the highest interest so maybe I should do the smallest amount first to get gratification even though paying the highest interest saves me money.
Tags: Best, Cards, Credit
You are doing it correctly (highest interest first and then moving the entire payment to teh next highest, etc.). If it is not working, are you using the cards? If so, you need to cut up whichever cards do not have balances (actually, you should cut up all but 1 that is used solely for emergency spending).
Paying off the smallest provides as you say instant but short lived gratification since the highest interest card has now grown and will be harder to pay off down the line.
Look for savings that you can make (drop premium channels from cable, call cable and get a better rate, switch to 7-11 coffee from Starbucks) and put all te savings toward that high interest card.
Steves answer is perfect – I would like to add.
One mistake people do is they close their credit cards when they pay them off.
Don’t do this.
If you close your oldest account, it could close your oldest credit card which establishes length of credit history
Also by closing cards, it reduces the overall unused available limits – a number creditors like to see.
Eventually pay in full each month.
I am proof that this can get you 800+ scores with no other loans.
It is 100% myth that carrying balances is good for you.
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Sorry, but without trying to be judgmental I wonder why you have 10 credit cards. The first thing I would do is cut up 8 or 9 of them then live within your means.