What should I pay first?

johnindebt · #1 (**permalink**) 04-20-2007, 02:11 PM

I can't figure out if it's better to pay high-interest cards first or low balance cards first...

I guess if you pay the high-interest cards first you pay less interest, but if you pay the low balance cards off, you can apply those payments to the other cards and pay them off faster...

Anyway - any thoughts about that?

John.

tater03 · #2 (**permalink**) 04-20-2007, 08:12 PM

I have struggled with that same question in the past. I have always thought you should go with the higher interest rate ones first. I am curious to see how others feel because I was never really sure if that was the best thing to do.

lyricb · #3 (**permalink**) 04-20-2007, 09:45 PM

I think it depends on the balance. If you have a bunch of lower-balance cards then pay them off first regardless of the interest rate. It will give you momentum.

Dru · #4 (**permalink**) 04-21-2007, 10:17 AM

If cash flow is an issue, paying off the low balance cards will free up cash sooner and allow you some breathing room. If cash flow is not a problem, it will be best to get rid of the higher interest rates as soon as possible.

brian · #5 (**permalink**) 04-21-2007, 01:03 PM

Indeed, there are two possible strategies:

1. Snowball your debt - pay off the smallest card first, and work your way up through the biggest ones

2. Pay off the larger interest rate cards first

Personally, I'd go for the larger interest rate cards first - you will simply save a lot more money in the long-term. However, if you find yourself struggling to keep up momentum, pyaing off the smallest debts in turn should help create a sense of achievement you can keep running with.

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