CC payoff

[wizard210]

I just recenlty did a balance transfer from a sears card over to a discover card. On the discover card I am getting 0% interest for 12 months.

My question is following DR plan of paying off the lowest balance first would I pay off the Discover card or skip it and move onto the next card since I'm getting 0% interest. I guess the question I have is do I pay off the cards and that are incurring interest at this moment and leave Discover alone?

[disneysteve]

Following DR, you would ignore the interest rates and pay smallest to largest balance.

Is that the route that will save you the most money in interest charges? No. That would require paying highest to lowest interest rate.

Both ways work. DR's way is more motivating. The other way is a little cheaper.

[jIM_Ohio]

I just recenlty did a balance transfer from a sears card over to a discover card. On the discover card I am getting 0% interest for 12 months.

My question is following DR plan of paying off the lowest balance first would I pay off the Discover card or skip it and move onto the next card since I'm getting 0% interest. I guess the question I have is do I pay off the cards and that are incurring interest at this moment and leave Discover alone?

What will the balance be on Discover card in 12 months?
what will interest rate be on discover card in 12 months?
what other debts do you have and what are their interest rates?

[Seeker]

I just recenlty did a balance transfer from a sears card over to a discover card. On the discover card I am getting 0% interest for 12 months.

My question is following DR plan of paying off the lowest balance first would I pay off the Discover card or skip it and move onto the next card since I'm getting 0% interest. I guess the question I have is do I pay off the cards and that are incurring interest at this moment and leave Discover alone?

I don't know DR or really any of the others except by reading here. My understanding is DR recommends the lowest total $ CC be finished first, for motivation and incentive to wipe out the smaller debts before tackling the larger.

I personally would concentrate on the higher interest rates, and wipe those out first, because that saves more $s in the long run.

But some people needs support and motivation, others just want to save all they can. So it really is a personal choice.

If I understand your question, you do not totally ignore any CC debt. Pay the minimum on all of them, pay any extra dollars on the debt you want to wipe out first. If you want to not concentrate on the Discover (just because at the moment it's 0% interest), you would still need to pay the minimum quoted (Call them to verify) or I think they will charge you other fees. Verify with them.

A long time ago I had a CC with a computer company that was 0% for six months. After one month, there was an extra charge: I called them and got it reversed...and paid them the $s that were billed over the phone. I did not read the terms, and had no idea that that is how it worked. This was probably 20 years ago. Things may have changed, but you should not ignore any bill.

[disneysteve]

I don't know DR or really any of the others except by reading here. My understanding is DR recommends the lowest total $ CC be finished first, for motivation and incentive to wipe out the smaller debts before tackling the larger.

I personally would concentrate on the higher interest rates, and wipe those out first, because that saves more $s in the long run.

I agree with you and prefer the highest interest method but the reality for most people is that it really doesn't matter much. Most people can be debt-free within 2-3 years in they get serious about repayment. The amount saved by doing highest interest vs. smallest balance ends up not amounting to all that much. And I understand the appeal of seeing the creditors get paid and crossed off the list. It is nice to go from owing 6 companies to owing 5 then 4 then 3 and so on. That is more inspiring than paying and paying and paying and still owing 6 companies even though the balances are smaller.

So highest to lowest interest is "best" financially but smallest to largest balance will work but may take an extra couple of months and cost you a few more dollars. Either way, the end result is the same - no more debt.

[jpg7n16]

Following DR, you would ignore the interest rates and pay smallest to largest balance.

Is that the route that will save you the most money in interest charges? No. That would require paying highest to lowest interest rate.

Both ways work. DR's way is more motivating. The other way is a little cheaper.

If you're looking for the DR method exactly, DS has spelt it out here. DR considers balance only - even for 0% cards.

But there's nothing wrong with modifying the DR method a bit. Make your list of interest charging cards from low to high balance, then 0% cards low to high balance.

Once the card switches and starts charging interest (after 12 mos is up), move it from one list to the other. Then proceed like normal.

[wizard210]

Here are my credit cards that I have that I'm paying off. Right now I'm doing lowest balance to highest following DR's plan.

1. Target
   1031.73
   19.99%
   $36
2. American Express
   2881.46
   13.2%
   $60
3. Chase
   3616.06
   19.2%
   $95
4. Discover
   3650.40
   0% for 12mo
   $113
5. Sears
   3963.52
   20.4%
   $105.69

I'm not sure about the min payements on the Sears and Discover cards. Those are estimates based on the bankrate calculator for min payments.

I guess I'm at a cross roads on what I want to do. I'm using Mint to track accounts and such. They have a goals section now and int here they have a debt payment goal. They list me as paying off Sears first.

I'm thinking of paying off Target then moving to Sears.

[jpg7n16]

For all of thsese, pay min on all except the 1st one, till it is paid off, then add pmt to the 2nd and so on.

Using the Dave Ramsey method:
1 - 2 - 3 - 4 - 5

Using straight interest:
5 - 1 - 3 - 2 - 4

Using a hybrid DR method: (as long as 4 is at 0%, once it starts charging switch back to original DR method, based on balance at that point)
1 - 2 - 3 - 5 - 4


My suggested: (1 and 5 are really close in interest, but 1 gives you a quick early victory)
1 - 5 - 3 - 2 - 4

As long as you keep paying as much cash as you can towards getting rid of this debt, any of the above methods would work just fine.

I like the Target then Sears idea.

[wizard210]

After some consideration I'm going to go with the pay target first then sears.

The sears card has been a thorn in my side. I'd like to say it was the start of my CC debt. I got swipe happy with it.

[Slandgie]

Did you try negotiating with the creditors to get your rates lower? I say this only because these rates seem a bit high. I have mine down under 10%.