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I have two credit cards; one with a $6800 balance at 27.49% and the other one has a $2800 balance with 0% interest until October. Should I pay off the one without any interest first and before October?
Always pay off the one with a higher interest rate regardless of their balances.
With the minor caveat that it's good to get balances a good margin from the credit limit, so that you don't get socked with over-limit fees, a credit hit or a raised interest rate. Those wolves are always sniffing at the door.
Ideally, the balance should be AT LEAST two full cycles of interest and minor fees less than the limit, and that close only assuming you are no longer putting purchases on the card.
But otherwise, yes. Pound on the highest-interest accounts first. And use the lower-interest card for any new needs.
The one card has zero % interest until October. If I don't pay it off before then the interest will start. I'm curious as to why I shouldn't pay that one off first.
Because 27% interest is an insanely high interest rate (my credit union has an 8% card if you have reasonably decent credit) and every month you have a balance there it’s like setting a stack of 20 dollar bills on Fire
I have two credit cards; one with a $6800 balance at 27.49% and the other one has a $2800 balance with 0% interest until October. Should I pay off the one without any interest first and before October?
Don't know your income.
How about you do
Plan A: Pay CC1 $100 per month, minimum to avoid extra charges @ 28%. Pay CC2 $1000 per month, pay it in 3 months? Then pay CC1 $1100 per month maybe in 7 months?
Plan B: Pay CC2 $100 per month, probably need to pay something? Pay CC1 $1000 per month, get it paid in 7 months? Then back to CC2 for the remaining 3 months? See how much interest is if you miss October? You don't want to pay another 27%!
Use any tax refund or virus payments to pay down either balance faster.
The Dave Ramsey plan to payoff the little $2800 one first is to make progress & get it done ASAP. Then you can focus all your energy on CC1. Kill the hill before you tackle the mountain.
In the current virus environment, your budget goes for food, shelter, health care if any, not much else.
I have two credit cards; one with a $6800 balance at 27.49% and the other one has a $2800 balance with 0% interest until October. Should I pay off the one without any interest first and before October?
Look at it this way. Yes, its simplistic, but it comes down to how much it costs you to make a transaction.
You buy something with a check.
You buy something with an electronic transfer.
It costs you nothing extra to make these transactions (well, almost nothing).
A card with zero interest still costs you the same nothing extra.
But, if the card charges you 27.49% interest, every transaction ends up costing you 27.49% MORE than it would if you paid another way. Does it make you happier to pay a cc company MORE for the privilege of using their plastic?
Not to mention that you have a much higher balance on the high interest card than you do on the lower interest card. That debt is costing you a lot more every month.
This is a no-brainer OP. Get rid of the bigger balance as soon as you can. Either pay it off or transfer it to a lower interest card.
What interest rate does the $2800 go to in October? I think that affects which one you pay off first.
27% interest is really outrageous. I would be looking into refinancing that or at least get it paid off as quickly as possible and NOT borrow any more money.
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