Posted on January 23, 2010.
What is the best strategy for credit card? I have 2 credit cards that I work hard and budgeting my money to try to repay. We have a very large balance ($ 8,000) and was a small balance ($ 800).
I have about $ 1,500 that I can put my debt this month. What is a smart thing: to most major card balance or pay down the card and pay the rest to the other card?
In fact, the best thing to do is first to pay by card interest rates higher. Pay the minimum payment on the card with the lower rate and pay as much as you can to the card with the higher rate.
Once the higher rate card is paid off, take what you pay per month for this card and put it toward the remaining balance on the card with lower interest rate until the balance is paid .
If both cards have the same rate, it is probably better to pay the smallest balance, since you have this sense of accomplishment sooner and it will make you more likely to stick to your payment plans.
Whatever you do, do not close credit account or when you've paid! If you do, you lose your credit history on each account. In fact, it can be a good thing if you have a lot of late payment, failing which you want to keep good payment history on your back and the only way is to keep the account open. In addition, the length of time you have had accounts opened is another factor in your credit score, even if you have one or two late payments, if the accounts have been open for several years, he has no doubt preferable to keep them open.
In closing accounts, you can significantly increase your "percent of credit used (the amount of credit you've used, divided by the amount of credit available to you), which is another component of your credit score since you are automatically reduce the amount of credit available to you. Your credit percent used should never exceed 30% if you can help, and it should be closer to 10-15% or less.
Each method has its advantages. 1) Pay the card that has the highest interest rate. This will give your payment as for its money. Suppose you have $ 800 at 15% and 24% to $ 800. Whatever the total balance, you save money to get rid of the debt that is generating more interest. 2) Just pay off the small first since it can increase your score. You decrease the number of accounts with a balance (which the agencies reporting similar). And you save to make an additional payment each month. Since you have more than enough to cover the balance, I'd say get rid of that one, then focus on the larger balance.
