Credit Card pay down order

[deadgoon]

I have three credit cards that I need to pay off. My question is, in what order do I need to pay them off? Here are the details.

Visa - $5800 - 0% interest for 6 months, then 10%
Discover - $1700 - 15% interest
Home Depot - $900 - 0% interest for 12 months, then 21%

I only have a limited amount of money to throw at this per month, so it will take me a while to get them down. I will try to surf the balances as best I can to keep the interest as low as possible, but if things remain the same here is my current plan.

Pay all minimums and put the extra on the Visa for 6 months until the 0% is over. Then put all extra on the Home Depot card for the next 6 months until the 0% expires. Afterwards I would just snowball them based on balance smallest to largest.

Does this sound like a good plan? I want to try to pay off as much of the balance as I can while the interest rates are at 0%.

[puck36]

Here is what I would do.
1. Home Depot $900
2. Discover $1700
3. Visa $5800

Now the reason for that order is the faster you pay off the smaller amounts first the more money you will have to pay of the visa. Dave Ramsey debt snowball goes the smallest amount to largest amount. The snowball does not care about the %. You still need to make the minimums on all 3 debts but any and all extra money on the smallest one. Then when that one is done take all the extra money + the payment for the smallest one + the payment on the next debt and pay off the next one and so on.

[maat55]

I agree with puck36's order.

[snshijuptr]

Dave Ramsey recommends a maximum motivation approach. I favor a minimum interest approach. To calculate this I would need your current minimum payments and how much extra you are prepared to put in every month. Or you can help yourself at this calculator I found online:
Snowball debt calculator - Become debt free at WhatsTheCost.com
Choose interest order for the least payed and balance ordered for the most motivating.

[jpg7n16]

At any time, pay the minimums on all - then with the extra you have to pay, put it all towards whatever the highest interest rate is at that time.

Interest rate by months:

Now:
Discover (15%)
Visa (0%, shortest till interest starts up)
Home Depot (0%, longest till interest starts up)

In 6 months:
Discover (15%)
Visa (10%)
Home Depot (0%)

In 12 months:
Home Depot (21%)
Discover (15%)
Visa (10%)


Pay the min on all cards except the one remaining at the top of the list = max interest savings.


No calculator needed.

edited to add:

Does this sound like a good plan? I want to try to pay off as much of the balance as I can while the interest rates are at 0%.

Oh to address this specifically - you've got it completely backwards.

Think of paying down a card, like trying to move out of an apartment.

Your plan has you staying in the apartments that charge you the most, while trying to quickly get your stuff out of the apartments with free rent.

And the Discover card is charging you more than the Visa even after the rate hop, so it's extra bad.

[jpg7n16]

Dave Ramsey recommends a maximum motivation approach. I favor a minimum interest approach. To calculate this I would need your current minimum payments and how much extra you are prepared to put in every month. Or you can help yourself at this calculator I found online:
Snowball debt calculator - Become debt free at WhatsTheCost.com
Choose interest order for the least payed and balance ordered for the most motivating.

That calculator's pretty cool, but I think it completely ignores the teaser rates. It's optional so you can put it in... and I gave the highest rate cards ridiculous intro savings like 0% for 36 months, and even at $500/month (which pays them all off before 3 years is up), it still said to pay extra on the 36 month at 0% interest card - because its ultimate rate is 21%.

So slightly misleading, but hey if it shows people to put towards the highest interest rate, then cool

I like how it also breaks out a method for low balance to high (which is much more appropriate for someone trying to change spending behaviors instead of maximizing interest savings). Nice link. Thanks

[Hector]

For first six months, I would try to put extra towards discover.

[skydivingchic]

One other thing to consider is if you will owe back interest if something isn't paid in full by the end of the promotional period. Many store branded CCs work this way. If you haven't paid the full balance by the end of the no interest period, you will owe all the interest you would have paid had the 0% not been in place. If either of your 0% cards work like that, I would concentrate on those first.

[CalireEHughes]

I agree with what jpg7n16 said. Focus on the ones with the higher interest rates becuase those are going to cost you the most money.