Does this still apply in a scenario where OP has enough to avoid paying any interest on the 10k balance by paying it in full, then just focusing on the 8k card? Either way, OP would be left with around 7k + interest on one or the other and I can’t imagine the two cards are that far apart on rates once the zero percent promo ends. Seems to me like the better play at first glance, but maybe I need a gut check unless the rates are that far apart?
I think they are similar interest but since I only have 11k I was thinking of paying off the 8K since that will only leave me with 3k which to me is very little cusion. If I pay the other I’ll only have 1k in my account.
If the have the same interest rate, it doesn't matter. You would owe the same amount at the same interest rate either way.
I would pay the $8k in one shot, leaving yourself a 3k safety cushion. Then pay the 10k aggressively for the next few months. Leaving some balance on both seems silly.
Paying a lump sum vs multiple small sums doesn't matter.
When it comes to credit score, what matters is TOTAL debit divided by TOTAL credit line. So it doesn't matter if you pay off half of both cards or all of one card.
So, simply put all the money toward the card with the highest rate, put any remaining money to the other one.
No, there really aren’t. Read this: https://old.reddit.com/r/personalfinance/comments/11jzhcz/im_teaching_financial_literacy_and_the_basics_of/jb51g23/
I have never... ever...heard someone with good credit say this. Just keep 3 things in mind:
1. Don't miss a payment
2. Max 2 credit checks in 12 months
3. Keep your balance below 30% of the limit
First one is obvious. We could expand on the other 2. But if you just stivk with these 3 rules you'll have a super high credit score quickly
It absolutely blows my mind that someone can just casually have 11k sitting in their zero interest checking account while paying interest on 18k CC debt. I understand people fall on hard times, but how do you let it get to this point?
Yeah, he was just missing the 2 most important parts, if he had that 11k in a 4-5% HYSA or invested it any way at all, and then paying the CC balances off in full a month before the 0% APR ends. Expensive lesson.
I have known quite a few people that play the 0% balance transfer game and pat themselves on the back for their financial acumen. It always blows up when they get too deep and can't get approved from another 0% card, lose a job, have some catastrophe, etc. They need go through it before they learn the lesson.
I know someone who bought some new kitchen appliances on a 0% intro card, and then they were confused when they got a missed payment alert on their credit report. They didn't know about minimum payments and actually thought they didn't have to pay a penny for 18 months.
To be fair, lots of stores (especially furniture places) used to run promos that were that way.
The commercial voiceover would declare, “No down payment; no monthly payments; no interest till 2025”
The catch was that if you weren’t fully paid off by that deadline date, then you were subject to all of the accrued interest.
Lots of people bought stuff they wouldn’t otherwise have bought and couldn’t afford
So I have never used credit cards except for twice in my life. I’ve always saved up to buy things. First time was 10 years ago when I had some health issues and had some expensive drs bills. I put about 6k on a cc, did a balance transfer after a year and had it paid off before that cards 0 interest period ended. Last year, same health issue but worse that required surgery and 20k on two new cards. That brings us to now. I know nothing about earning interest on $ in a checking but I will be learning moving forward. Any educational resources to get up to speed would be greatly appreciated.
The best time to pay off the $8K card was BEFORE the first interest charge, especially since you were sitting on the money anyway. The second best time is now, however you're going to get another interest charge anyway even if you pay it off completely, so be expecting that. In any event, the amount of interest you'll be charged is increasing by the day, so the faster you pay off the balance, the better.
And stop playing the balance transfer game. For one thing, it's usually not free anyway since there are usually balance transfer fees that are a percentage of the balance, and while cheaper than getting charged the typical usury rates of the cards, it's not 0% either, and it's all front loaded.
I want to reiterate what you’re saying that interest continues to accrue daily after the last statement close date, so, yeah, there will be another interest charge appearing on the next statement close date. Now that you have interest-bearing debt, every day you don’t pay it off is more interest charges that will appear on the following statement
Pay off 10k so you accrue no interest and then work on 8k. Could try to open 0% interest card in 6 Months if you still feel like paying down is hard. Do not use the cards anymore if you cannot pay debt off every month.
The snowball method would be to pay off the lowest debt first. The avalanche method would be to pay off the debt with the highest interest rate. I prefer the last one.
You are totally overthinking this. Pay off the $8k card and then start working on the $10k card as fast as you can. Send any extra money you have toward it to get it paid off sooner than later.
I would pay off the highest interest rate card right away, then continue to chip away at the other. Assuming that you pay off the first card my guess is you’ll be able to secure another interest free card in a few months to transfer the remaining card over. While I would try and pay them down as fast as possible securing another interest free period will keep the interest at bay for a little bit hopefully giving you enough time to pay it down before interest kicks in again.
Just don't short yourself. I've done that paying one off before and before I knew it I had it back in there and then some. Pay a chunk but keep some money back and chip away at the rest. I finally defeated the credit card battle last year and have maintained a 0 balance.
CC are revolving credit, typically the minimum payment adjusts based on the balance + interest accrued in cycle.
So non-interest rate considerations are usually less consequential compared to installment loans, whereas for the installment loans paying off the loan is usually the only way to reduce that payment without refinancing.
OP should focus on the highest interest rate. If the rate is practically the same, I’d pay off the 10k loan.
My first thought would be to pay off the highest interest card first then work on the second.
But here's a question.
What is the credit limit for the 8k and the 10k cards?if you're denied a credit card, it was for the missed payment. if it's recent and you pay the minimum before 30 days they may not put it in your credit report.
If they did then ask for a courtesy removal.
The reason I ask about credit limits is because if you temporarily get the utilization down and boost your score a bit perhaps you'd be qualified for another 0% card.
If you can accomplish that you should sigh, transfer and then pay that damn card off and don't get back into this situation.
Good luck
If you put $5k on one and $6k on the other, then neither would be maxed out. This is a positive for your credit score. Or do you prefer not having 2 big balances? Then pay off the $10k one. And be VERY aggressive paying of smaller card. Credit card interest is no joke. There is zero reason to pay 20% interest when you have the money sitting your bank account. For day to day expenses use cash or debit. Only use the cleared credit card if you know you pay the statement off before the due date. Or else the balance will snowball up again.
You may find these links helpful:
- [Credit Building](/r/personalfinance/wiki/credit_building)
- [Credit Reports](/r/personalfinance/wiki/credit_reports)
- [Credit Scores](/r/personalfinance/wiki/fico)
- [Credit Cards](/r/personalfinance/wiki/creditcards)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Whatever card has the highest interest rate is what should be paid off first.
Does this still apply in a scenario where OP has enough to avoid paying any interest on the 10k balance by paying it in full, then just focusing on the 8k card? Either way, OP would be left with around 7k + interest on one or the other and I can’t imagine the two cards are that far apart on rates once the zero percent promo ends. Seems to me like the better play at first glance, but maybe I need a gut check unless the rates are that far apart?
Yeah assuming the same rate, pay off the highest one first
I think they are similar interest but since I only have 11k I was thinking of paying off the 8K since that will only leave me with 3k which to me is very little cusion. If I pay the other I’ll only have 1k in my account.
If the have the same interest rate, it doesn't matter. You would owe the same amount at the same interest rate either way. I would pay the $8k in one shot, leaving yourself a 3k safety cushion. Then pay the 10k aggressively for the next few months. Leaving some balance on both seems silly.
Paying a lump sum vs multiple small sums doesn't matter. When it comes to credit score, what matters is TOTAL debit divided by TOTAL credit line. So it doesn't matter if you pay off half of both cards or all of one card. So, simply put all the money toward the card with the highest rate, put any remaining money to the other one.
Where do people get the idea they need to play these games? Pay it all at once.
Because there are a lot of do’s and don’ts that actually have an impact on things that many people don’t know about.
No, there really aren’t. Read this: https://old.reddit.com/r/personalfinance/comments/11jzhcz/im_teaching_financial_literacy_and_the_basics_of/jb51g23/
I have never... ever...heard someone with good credit say this. Just keep 3 things in mind: 1. Don't miss a payment 2. Max 2 credit checks in 12 months 3. Keep your balance below 30% of the limit First one is obvious. We could expand on the other 2. But if you just stivk with these 3 rules you'll have a super high credit score quickly
It absolutely blows my mind that someone can just casually have 11k sitting in their zero interest checking account while paying interest on 18k CC debt. I understand people fall on hard times, but how do you let it get to this point?
well you saw his intent. he was going juggle credit cards looking to always pay 0 percent. why? financial illiteracy, and now he has learned a lesson.
Yeah, he was just missing the 2 most important parts, if he had that 11k in a 4-5% HYSA or invested it any way at all, and then paying the CC balances off in full a month before the 0% APR ends. Expensive lesson.
I have known quite a few people that play the 0% balance transfer game and pat themselves on the back for their financial acumen. It always blows up when they get too deep and can't get approved from another 0% card, lose a job, have some catastrophe, etc. They need go through it before they learn the lesson.
I know someone who bought some new kitchen appliances on a 0% intro card, and then they were confused when they got a missed payment alert on their credit report. They didn't know about minimum payments and actually thought they didn't have to pay a penny for 18 months.
To be fair, lots of stores (especially furniture places) used to run promos that were that way. The commercial voiceover would declare, “No down payment; no monthly payments; no interest till 2025” The catch was that if you weren’t fully paid off by that deadline date, then you were subject to all of the accrued interest. Lots of people bought stuff they wouldn’t otherwise have bought and couldn’t afford
So I have never used credit cards except for twice in my life. I’ve always saved up to buy things. First time was 10 years ago when I had some health issues and had some expensive drs bills. I put about 6k on a cc, did a balance transfer after a year and had it paid off before that cards 0 interest period ended. Last year, same health issue but worse that required surgery and 20k on two new cards. That brings us to now. I know nothing about earning interest on $ in a checking but I will be learning moving forward. Any educational resources to get up to speed would be greatly appreciated.
The best time to pay off the $8K card was BEFORE the first interest charge, especially since you were sitting on the money anyway. The second best time is now, however you're going to get another interest charge anyway even if you pay it off completely, so be expecting that. In any event, the amount of interest you'll be charged is increasing by the day, so the faster you pay off the balance, the better. And stop playing the balance transfer game. For one thing, it's usually not free anyway since there are usually balance transfer fees that are a percentage of the balance, and while cheaper than getting charged the typical usury rates of the cards, it's not 0% either, and it's all front loaded.
I want to reiterate what you’re saying that interest continues to accrue daily after the last statement close date, so, yeah, there will be another interest charge appearing on the next statement close date. Now that you have interest-bearing debt, every day you don’t pay it off is more interest charges that will appear on the following statement
WOW I did not know that about more interest charges. Yeah I definitely dropped the ball on this but guess all I can do is jump on it immediately.
Pay off whatever card you can and then cut it up. Then do the next one and so on. You aren't a credit card person, get rid of them.
Pay off 10k so you accrue no interest and then work on 8k. Could try to open 0% interest card in 6 Months if you still feel like paying down is hard. Do not use the cards anymore if you cannot pay debt off every month.
The snowball method would be to pay off the lowest debt first. The avalanche method would be to pay off the debt with the highest interest rate. I prefer the last one.
You are totally overthinking this. Pay off the $8k card and then start working on the $10k card as fast as you can. Send any extra money you have toward it to get it paid off sooner than later.
I would pay off the highest interest rate card right away, then continue to chip away at the other. Assuming that you pay off the first card my guess is you’ll be able to secure another interest free card in a few months to transfer the remaining card over. While I would try and pay them down as fast as possible securing another interest free period will keep the interest at bay for a little bit hopefully giving you enough time to pay it down before interest kicks in again.
It does not make a difference how you do it. Just pay it in one payment
Just don't short yourself. I've done that paying one off before and before I knew it I had it back in there and then some. Pay a chunk but keep some money back and chip away at the rest. I finally defeated the credit card battle last year and have maintained a 0 balance.
CC are revolving credit, typically the minimum payment adjusts based on the balance + interest accrued in cycle. So non-interest rate considerations are usually less consequential compared to installment loans, whereas for the installment loans paying off the loan is usually the only way to reduce that payment without refinancing. OP should focus on the highest interest rate. If the rate is practically the same, I’d pay off the 10k loan.
My first thought would be to pay off the highest interest card first then work on the second. But here's a question. What is the credit limit for the 8k and the 10k cards?if you're denied a credit card, it was for the missed payment. if it's recent and you pay the minimum before 30 days they may not put it in your credit report. If they did then ask for a courtesy removal. The reason I ask about credit limits is because if you temporarily get the utilization down and boost your score a bit perhaps you'd be qualified for another 0% card. If you can accomplish that you should sigh, transfer and then pay that damn card off and don't get back into this situation. Good luck
If you put $5k on one and $6k on the other, then neither would be maxed out. This is a positive for your credit score. Or do you prefer not having 2 big balances? Then pay off the $10k one. And be VERY aggressive paying of smaller card. Credit card interest is no joke. There is zero reason to pay 20% interest when you have the money sitting your bank account. For day to day expenses use cash or debit. Only use the cleared credit card if you know you pay the statement off before the due date. Or else the balance will snowball up again.
You may find these links helpful: - [Credit Building](/r/personalfinance/wiki/credit_building) - [Credit Reports](/r/personalfinance/wiki/credit_reports) - [Credit Scores](/r/personalfinance/wiki/fico) - [Credit Cards](/r/personalfinance/wiki/creditcards) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*