Hello all,
I'm trying to pay off my credit card debts. I have 4 cards, all with low balances (less than $670). I was wanting some advice on the best way to pay them off whilst paying the least amount of interest. I make monthly payments, and the credit cards are currently set to minimum amount.
The way I understand credit cards is that any purchases made on the card aren't charged any interest for a month (is this a month after purchase or until the start of the next billing period?).
I think I have two options:
1. Keep making minimum payments, then before payday see how much money I have left for payments and pay it off whichever card (snowballing).
2. On payday, pay off large amounts from the cards, then use the cards when the cash starts to run low.
My theory is with option 2 I wont be paying interest on the money spent throughout that month.
Am i right?
paying off credit cards
Hi Kaci,
The second option
2. On payday, pay off large amounts from the cards, then use the cards when the cash starts to run low.
is better.
The way I understand credit cards is that any purchases made on the card aren't charged any interest for a month (is this a month after purchase or until the start of the next billing period?)
Actually the interest is calculated (mostly) daily. Infact the lower the balance, the less the interest rate. It is always good to make small payments toward your account, rather than making a large single payment each month.
Hope this helps.
Regards,
Aaron
1. the interest rate does not decrease when the balance is lower.
2. Where in your plan do you mention spending less? this is the most important part. whether you pay cash or use your card, you need a budget that allows you to pay for expenses and pay down your cards.
3. I would try and focus on consolidation. I don't mean balance transfer as that can get expensive. But focus on getting a card paid off while paying the min on the others.
What you shared is exactly true about he credit cards...
company credit report