Which Credit Card Should I Pay off First

Which Credit Card Should I Pay off First

Which Credit Card Should I Pay off First? It is very possible that in this era a person would have more than one credit card, that is because different credit cards are mostly needed for different purposes. Since credit cards come with bills, the only it is highly possible that you would be in debt on each of the cards. Now, you must map out a very good plan to settle the debts on each of the cards, since it is not one card you may be wielding, the question is which one do you pay off first and how do you decide which one to pay first.

This write-up is about helping you to come out with a good plan on which one to pay first and which one to pay last. There are different methods for deciding which one to pay first. Let us go through a few.

Snowball

This method of paying off your credit card debt says to pay off the debt of the card with the smallest balance first.

A group of experts in the credit card industry opine that you first pay off the credit card with the least debt. And then keep the “least payments” that exit with the other cards. The last payment is what is referred to as the “minimum balance”

Note that this method will not necessarily beat down the accumulative interest you are going to be paying off. It is simply a way of generating enough strength to clear the debts. As soon as you are done with one card, this will bring you some joy and determination to get on to the following one and have the least balance. You continue this way till you are done with all of your debts. Here are a few steps with the snowball method.

Avalanche

This method says you should pay off the card with the highest APR first. After that, deal with the next one with the highest and in that order. This method gives you the opportunity to beat down the quantum of money you will spend in the life cycle of all your cards put together.

What is more, it will also aid in drastically reducing the balances you have in a faster way than the other methods. However, the principle of getting rid of debts stays equal.

If you are considering paying off your debts in a monthly way, you can use the same method. i.e. paying off the one with the biggest APR and then once done, you so a sum of the monthly payment of the first card with the “minimum payment” of the card that is next in line. This way, it becomes easy to know which amount you are paying in the next coming month.

With the above two methods, these are a few strategies you can add.

Make sure you are paying more than the minimum balance each month

When you pay more than the minimum balance that is due each month, what happens is that you continue to will beat down the amount of interest you are supposed to pay in total.

Determine how much you can comfortably pay off each month

Just imagine that you are able to come up with exactly how much you can confidently pay off each month. Once you do that, you are able to plan towards it and then clear your debts gradually with a proper timeline. This will help you to have a way out without stress.

Take inventory of all your cards’ APR and balances

This should be done even before you begin. List all the credit cards you have, and list out their balances and their APRs. You can get these from their statements. Once you have it, you can estimate which card has the highest interest and which card has the highest debt and which one should be tackled first. The method will greatly help you.

Come up with the best strategy

Now that you have taken inventory, come up with the correct strategy that will work for you. Do this with the knowledge of the inventory you have taken. Now that you know how much you owe, you are now able to select which strategy is best for you and will be okay for your pocket. You can now also select one of the methods shared above.

Having done all these, these are a few tips to not accumulating debts on your credit cards

First, maintain a good spending habits.

Be sure you are purchasing only what is needed with the cards and don’t overly withdraw cash since it will increase your interest and debts.

Secondly, learn to convert your card’s good balances to savings, it is possible to convert any gains on your cards to savings, once you do this regularly, you are better able to build up some savings for yourself

Next, take advantage of credit balance transfers, if you find the opportunity to transfer your balance to a card with low interest, please do. This will help to reduce the amount you would be owing each time.

Lastly, constantly monitor your score. A good credit score is very important for the future, and so you want to monitor your credit score all the time, this way, you keep yourself in check and don’t pile up unnecessary debts.