Creditnet Weekly Tip
What's the Best Way to Pay Off Credit Card Debt?
If the only thing that matters to you is saving dollars and cents, the strategy that clearly makes the most financial sense is paying off the balance with the highest APR first. Start out by tripling your monthly payments on the card with the highest APR while continuing to make the minimum payments on the rest of your credit cards. When the balance reaches zero, do a little celebration jig, and then move on to the credit card with the next highest APR until you are debt free.
Remember that while this strategy will save the most money in finance charges, it may not be the best way to improve your credit score in the short term. Since credit utilization is an important component of your FICO score, you may be better off focusing on paying down the credit card with the highest utilization ratio first.
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