Is it better to pay off my high balances first?
Posted by Jo on July 8th, 2013
This depends on whether you are trying to increase your score or to save on the interest that you’re being charged by the credit card companies. Your score is calculated by percentages, so in order for you to increase your score, you should definitely pay off ALL of your revolving balances. If that is not possible, work on reducing the smaller balances to zero and work your way up to the higher balance cards. If you’re trying to save on the APR that you are being charged for carrying a monthly balance, you should pay off the card with the highest APR (Annual Percentage Rate) and work your way down – HIGHEST APR TO LOWEST APR. On the flip side, if you’re trying to obtain a mortgage, the lender typically looks at your overall monthly payments (debt). So, in that case, you should pay off the higher balances first so that the monthly revolving payments are lowered.