Silly Question on Interest Rates (pay, rate, credit, balance)
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The question I have is, are the 10.24 rates better or lower than what the new card rate will be? I was under the impression that Interest Rates are accumulative in their cost, meaning that the actual cost of my two cards combined is really 20.50%. So it would make sense to consolidate these into a lower interests account. However, if I'm just hallucinating, then I may be better off leaving them alone.
Any insight you may shed on this issue will be greatly appreciated!
Keep the 10.24 (and stay current). Cause they will jump to 'default' rate of 25+ . You dont add the rates together on the CC1/CC2 Each one you pay the 10.24 APR per year on each. the 18% one would double your intrest expence each month.
For proper comparison, you add the balances but use weighted average for interest rates. However, since your interest rates on the cards are identical, the answer is CC1 + CC2 = $21,000 at 10.24% currently v. $21,000 at 18% if you consolidate. Your current situation is much better.
Where you might see some confusion is looking at the total minimum monthly payments. Depending on the credit card payment plans, your minimum monthly payment for 1 card at 18% may be lower than two separate minimum payments. However, this only means you are paying more interest and for a longer repayment period.
Bottom line, don't consolidate your credit cards.
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