Credit Report Agent

I have 4 credit cards and a loan that I owe $20K. I recently read that I should pay off the lowest balance first, but my husband thinks I should pay off the highest rate first. Any suggestions?

Holy, crap woman!!

Read 'The Total Money Makeover' by Dave Ramsey. This guy is great, he built an entire empire by instructing people how to get out of debt. Your question is the #1 basis for his book.

Depends on what you are trying to achieve

Lowest balance = better credit rating
Highest interest = less spent on interest, i.e. more money in your pocket.

Depends which will motivate you more to paying off your debt. some feel that by paying off the lowest card first, it inspires them to keep going. Since it's paid off faster you can use that money to supplement your other payments. It's called the snowball effect. Personally, I did it that way as it was empowering to see the payment plan working so quickly (we paid off $32K in 1 year). if you have more patience, then, yes, paying off the higher rate card is a good idea but only if you don't get discouraged (assuming the higher rate cards have higher balances as well).

Pay off the lowest balance first – that way you can take the money you were applying to that one and start paying on the high interest rate one. Instead of continually having to split your money up. call your credit card company and see if they will lower the interest rate on the highest one. . .

You should pay off the one with the highest interest rate first, making the largest monthly payment that you can, not just the minimum.or, see if you can consolidate yourf 4 cards into the one with the lowest rate; or see if any of your cards have a special low rate for balance transfers that is good for the life of the transfer.if you do this, though, keep in mind that any npayments that you make will be applied to the balance with the higher interest first until that balance is payed off, then your payments would be applied to the special interest rate balance.

If the object is to get out of debt, Paying the highest rate first is always better. The less interest you pay, the more you have to apply to principal.

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good luck!

Credit card payoffs – highest interest rate or lowest balance first?