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Question By
ecec123

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Should I pay highest interest or highest finance charge first?
I may be looking at this totally wrong...please bear with me.

I know one common method for paying down credit card debt is to attack highest interest cards first. But, doesn't it make since to pay whichever card has the higher finance charge (monthly interest * balance)?

Example (Card, Balance, APR, Finance Charge):

Card 1, $1,375, 18.90%, $22.40
Card 2, $3,287, 16.99%, $46.56

Typical advice would suggest I pay down card one since it has a higher interest rate, but isn't holding the balance on card 2 costing me more per month?

Thanks for any clarification.

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There are always two ways to look at things. One is to pay off the one that is costing you more, and the other is to pay off the one that will free up more money to pay off the others faster.

The choice is yours to make.

I personally would choose to pay down the one costing me more until I could see the light at the end of the tunnel (so to speak) and could pay OFF the one that freed up more money to pay down the other even faster. Sort of a combination of both.

Reply by
ecec123

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Helpful to 1 out of 1 people

Thanks for the advice!

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