Credit Cards?

I owe two credit cards and they are about 1400 each there is one that charges more interest than the other one. So my question should I pay them equally or pay more money to the one that has the higher interest?

Public Comments

1. Pay off more on the one with higher interest.
2. Go to daveramsey.com and follow his program to get out of debt. This guy really makes sense and is not a ripoff deal.
3. I would pay more money to the higher interest rate and still make my regular payments on the other one. Try to get them back down--then only use them for emergencies or when you know you can pay off the entire bill when it comes due. Why should you give the credit card companies more of your hard-earned money than you have to?
4. Can you transfer your balances from one or both credit cards to a zero interest credit card - and pay them off faster? If not, pay more to the one with the higher interest off first - then the lower interest one.
5. I would probably try to pay the one off that has the highest interest rate. It is the interest rate that kills you. And after that I would stick with a credit card with a lower interest. Credit Unions that you do business with are a good place to get a credit card with a low interest rate. Also the bank you do your banking with is also a good place to get one. Store credit cards are so high on interest rates. 28% is nuts. Providian also carges a high interest rate. You just have to shop around. Good luck!
6. Pay the minimum due on the one with the lower interest, and whatever you can afford on the one paying higher interest. In the long run this will say you money.
7. The quick answer to your question is that you will spend less on interest paid to the two of them if you pay the minimum payment on the one that has the lower interest rate and pay the other its own minimum payment plus any extra money you can budget every month. That's what I do, by the way. I like saving money and due to a pair of fairly unique factors, I cannot better the situation by acting on what follows. So I take the simple approach and save what I can doing so. But... as with everything involving credit cards, there is more to the big picture than just this. First of all, your credit score (which is calculated differently by every large lender in the world, so any service you might subscribe to will only be able to offer the guess the reporting agencies make — and even the local furniture store doesn't really lend to you: they use someone like Citibank so even the local furniture store isn't a place you can expect the reporting agency scores to be used!) is affected by more than just being on time or late. It is affected by you "negotiating" with the creditors for better terms. Often you will see people suggest doing so but the creditors that do offer something lower in interest and fees report you as not living up to your agreement and that means every month thereafter you are reported so. They often don't report a month until a couple months later, but each one that shows up bears that stigma. It is also affected by the percentage you get when you divide your balance by the credit limit. The "sweet spot" is 40% - 66%. For whatever reason, they regard you as not really using the credit if it's less so you are no better than an 18yo who is just starting out and they hate it when it gets higher than 66%. This suggests there is a value to paying on both of your cards until you reach the point of both being safely inside this range. Then pay the highest rate card down as fast as you can afford to. However... (I did say it's complicated) credit card issuers often wait until you pay down by some amount, say $500 or $1,000 and once you have, making your percentage used nicer, they lower your credit limit! That wipes out the benefit of lowering your percentage because you are now way up in the 90's again! (SCUM) For instance, you pay one down to $2,200 and its limit was $3,500. 63%, looking good. Then they drop the credit limit to $2,500 and you look like a loser at 88%. Not to mention no longer having access to the $1,000 they lowered it. Which brings up the next point which gets a wee bit off subject. You need a cash hoard of some amount. What if you're fired tomorrow? Suddenly no checks, no paying of the rent. Experts say you need 6 months of expenses saved up, but lots of people can't do that. But at least one rent payment so you are not homeless (because problems REALLY snowball when that happens) is essential enough to do it if you at all can. Many people use their credit lines to cover this need, not cash at all. Risky, of course, but if it's all you can do, it IS something. But... the credit card you counted on just lowered your limit and you only have $157 available... What to do to avoid this? As bad as it sounds since it means paying a lot more interest, putting some or all of the extra payments aside until you have at least that one month's rent even though it means you owe them longer and pay a higher interest before they are paid off can be a very good idea since they then cannot rip the rug out from under you by lowering a credit limit. Another value to doing so is that you can raid the savings account if you are in danger of not having the cash to make a minimum payment or other bill on time. So long as you put it back the next paycheck of course. I should mention the credit card people all have clauses giving the the right to jack your interest rate way up if you even pay the sewer bill late one month. It's called the "Universal Default Clause" and while it's getting them a ton of heat in Congress right now, it likely won't go away entirely, just get modified. So the cash hoard is good for a variety of reasons and is at odds with the simple approach in the first paragraph. Next though, back to the credit score. Your credit score is also affected by the ratio of your credit lines to your income as well as your debt to income ratio. So having extra credit cards, Fashion Bug's perhaps, even though you find it hard to imagine using them, and their extra credit limits can lower your credit score. Having extra ones in the sense that you charged something just because you could rather than pay cash or use an existing credit card is bad too because it just raises your total credit available for no great reason. Going to Best Buy for instance, and buying a vacuum cleaner and 6 DVD's and opening their credit card because they offer it when checking out. You could have used the lower interest card, perhaps, and only went back for the DVD's because it was credit... Avoid these if you have no need for them and close accounts you can't honestly see a real use for. What does taking care to not lower your credit score have to do with anything since saving $$$ is the point? Well, of course, they choose the exact interest rate, even if they lower it, by taking your score into account. All of them figure it differently, as I mentioned, though broadly in synch with the scores a reporting agency service might sell you. But they all take the score into account. Your interest rate is, say, 32.24% right now and you have met their conditions for lowering it? Nice... except your score has been damaged by that Best Buy credit card (and Fashion Bug and others) so they don't lower it to 18.90%, they lower it to 22.25%. In this example, a $2,200 debt would pay $42.40 more per year. Two cards, more due on the other? Say $100 more. Wouldn't it have been better to not apply for new ones and drop the old, unnecessary ones? Finally, about applying: they also lower your score for every application you make and even for every enquiry by a potential creditor if the potential creditor says you authorized it. That includes employer enquiries too. Just say NO to potential bosses. If it's a deal breaker for them, the odds are you wouldn't have survived long there even if they did see your lower-than-it-has-to-be score and still hired you. Apply at 15 places knowing you will only take one job and that's 14 extra enquiries you didn't need! But maybe you don't need that extra $100. Maybe you don't need to pay them off a month or two earlier than you will now. Why else might you care? Because your lower credit score will affect the largest debts in your life sooner or later. Credit scores lower in moments but take a long time to rise much. So, even though it's not on your radar just now, what about buying your next car? Your first new car? A house? If your score is lower and causes a house loan to be just 1% higher, guess how much you will pay in extra interest over a 30 year loan? (Or worse, to have no one willing to offer a straight loan, but rather an ARM that will rise 1% every 6 months... I know something about THAT and it means I now pay $355 more per month for my house loan than I did when it started three and a half years ago (and it didn't even start changing until one and a half years ago). Like I said though, the unique factors keep me from having any way to change it. It SUCKS to live with it though so think about that yourself when planning things!) Say the rate is 8% instead of 7% and the house was 100,000: $16,620.59 ($554.02 a year, $46.17 a month). That's a car. A whole car. A kitchen remodel. 15 vacations. The most incredible engagement ring you ever imagined. 2-3 years of season tickets for your favorite team. 16 Shiba Inu puppies. You get the idea. The point here is not just the pile of money involved, but how allowing one card to remain with a high use ratio by paying down just the one might cause a debt you don't even imagine having yet to cost you vastly more than you might save paying the higher interest rate card down, then the other. The complicated thought is it might be best to put the extra money into paying both down until the sweet spot range is reached, then pay down the higher interest card the most. If you had $3,500 on each of two cards, one at 32.24% and the other at 28.90%, paying down the higher one first, then the other might save you (in one example) 1/3 of the interest, perhaps $1,300-$1,400 dollars but not having brought their use ratios into the sweet spot could cost you the $16,600 on the house loan. Pennywise and pound-foolish, eh? It gives one pause for thought. So, yes, pay the one with the higher interest rate more, but think about the other things as well. Get rid of cards you don't need, do not apply for ones you don't need, do not let potential employers have permission to see your credit report, and think about the cash hoard. When you find yourself about to reach a mark like $500 available credit, call the credit card company and talk to them about not wanting the limit lowered because of it affecting the use ratio. It might work. Oh, and avoid any offer one of the cards might make to give you a lower rate and minimum payment if you agree to "sort of" close the account and return their card. They report these accounts as not living up to their agreements also even though they made the offer out of the clear blue sky, not by you calling them and at least implying you will stop paying them altogether (which is how most people who suggest you "negotiate" with them sooner or later tell you to get them to lower the rate and fees).
8. yes, pay off more to one which have high interest...
9. If the company to whose credit card you have applied, charges you a very high interest rate, avoid it. When you apply for secured credit cards, you'll find some companies will charge you an annual fee. It is ok in certain cases. An annual fee not exceeding $60 is acceptable. But don’t pay over $60 in annual fees for a secured credit card.