Pinch Like You Mean It! 101 Ways to Spend Less Money Now by Dr. Penny Pincher - HTML preview

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Tip 44: Pay off high interest credit cards first

You can save money on interest by paying down credit cards with high interest first.  Some credit cards have interest rates over 20%- these are the ones to pay down first.  Consider a balance transfer to a card with a lower interest rate.  This will help you pay off your debt faster.

Some financial planners recommend a "snowball" approach to pay off credit cards by starting with the cards with the smallest balance first.  When you get a card paid off, you apply its payment amount to the next card.  I think this can work for some people, although you would spend a bit more on interest than if you attacked the cards with highest interest first.  One advantage to paying off the cards with small balances first is that you get rid of a minimum payment every time you pay off a card, which gives you more money to pay down other cards. 

I would say that as long as you are paying off credit cards, the order is not that important.  If you have to choose which card to pay off first, choose the one with the highest interest rate.

 

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