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dadcoachingsoccer

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Better to pay off smaller credit card balances or higher interest rate?
I have a total of three cards. Two of them have a low interest rate (8%) with a balance of around $2k. The third card has the highest interest rate (14%) w/ a balance of around $14k. Should I try to pay off the two smaller cards first or should I pay the higher interest (& higher balance) card? I feel like I would saving money by paying off higher interest card since it has the higher fees, but not sure if my thinking is correct. Thanks in advance for your help and input.

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dadcoachingsoccer

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You need to look at some of your info and decide.  Personally I would look at the limits on the individual cards and utilization rates on those cards to make the decision.  My own experience has shown me that utilization on any single card can play a factor in your score, not just overall utilization.

Obviously you want to pay the higher interest off first to save money.  But maybe not at the expense of having a seriously high utilization rate on another card.  You didnt state your limits so I cant guess what the utilization is.  If you dont care if your score droops in the process because of utilization reasons, then pay the higher interest off first.  If you are looking to keep your score optimized for your own personal reasons, then you will need to play a balancing act with overall utilization vs any single card utilization.  Only you have those numbers so you will need to figure it out.  By the way: where did you get an 8% credit card???? 

Bottom line: if you dont care about your number fluctuating in the process...pay high interest first.  If you need to maximize your FICO, then I think you want to even the utilization numbers and then reduce them all evenly with steady payments until they are under 20%.

That is my understanding.  I look at it this way.  If I was the lender, steady payments from someone would make me sleep better than big ups and downs.

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