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Old 03-17-2007, 04:21 PM
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cptacek cptacek is offline
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I would immediately pay off #5 and #6 because #5 is 23% interest and #6 will be 18%. These are your highest rate cards, and the refund will allow you almost wipe them away (add some other money to them to get them completely paid off), freeing up some of your cash to put towards other debts.

Now, I've had this work sometimes before, sometimes not. I've included a note with my payment to a card similar to your #1, with two different interest rates on the balances, and asked that they apply the payment to the higher percentage. Like I said, sometimes it works, but it usually only works once. I would try to scrape together a pretty big amount and do it once. If they don't apply it to the higher amount, they will at least apply it to the lower amount. If they don't allow you do do it, then concentrate on #2.

The reason I say concentrate on #2 is that if they don't allow you to pay down the higher interest rate on #1, then you have to consider that as one debt. You have $8500 @ 5.99% and $4000 @ 15.29%.

Interest on the $8500 should be about $42.43 per month (Principal * Rate * 1 month / 12 months in a year) or ($8500 * .0599 *1 / 12) = $42.43

Interest on the $4000 should be $50.97 per month ($4000 * .1529 * 1 / 12) = $50.97

So you are paying $93.40 on a debt of $12500. That is an effective interest rate of 8.96% per month. It's not important, so if you want to skip this part, that is fine, but I got this by:
=> Interest = Principal * Rate * 1 month / 12 months in a year
=> Interest * 12 months in a year = Principal * Rate * 1 month
=> Interest * 12 months in a year / Principal = Rate
=> $93.40 * 12 / $12500 = .0896 = 8.96%

So, now you have one debt of $12500 @ 8.96% and one debt of $13000 @ 13.99%. So, I would pay off card #2.
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