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    "Pay off high-rate debt first"

    My question is regarding the suggestion to "Pay off high-rate debt first." What if I have 2 accounts to pay off...one is 0% until 10/09 then 13% while the other is 8.99% indefinitely. Which one should I pay first? Thank you!

    #2
    Originally posted by katz079919 View Post
    My question is regarding the suggestion to "Pay off high-rate debt first." What if I have 2 accounts to pay off...one is 0% until 10/09 then 13% while the other is 8.99% indefinitely. Which one should I pay first? Thank you!
    What are the two balances?

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      #3
      Around $6,000 each.

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        #4
        Originally posted by katz079919 View Post
        Around $6,000 each.
        Pay the minimum on the 0% and pay all you can on the other.

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          #5
          Thanks!

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            #6
            Originally posted by katz079919 View Post
            My question is regarding the suggestion to "Pay off high-rate debt first." What if I have 2 accounts to pay off...one is 0% until 10/09 then 13% while the other is 8.99% indefinitely. Which one should I pay first? Thank you!
            While paying the "minimum" on the 0% balance, save the complete payment so that come Oct '09, you can PIF (pay-in-full) that entire amount due.

            If you don't foresee having 6K before Oct'09, then you need to look at this closer.... because that interest rate will be more problematic then.

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              #7
              When promo rates expire with a balance, they will almost always charge you interest on the original balance, not just what's left in the account. So, if the rate changes you will have to pay as if you were paying the 13% APR the entire time.

              Unless you have more than $1,000/mo to put toward the debt, your focus should be to pay off the 0% before the promo rate wears off. If you can afford to pay more than $1k, you will be able to pay off the higher interest account first and still be able to pay off the 0% before the rate changes.

              So, assuming your total payment will be less than $1k... Pay $500/mo on the 0% so that you will be sure to have it paid off before the 0% expires ($500 * 12 mo = $6,000). Anything left above the $500, pay on the other account. Next year when the 0% is paid off, roll the $500 into the other account and soon it will be paid off.

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