which credit card should I put extra payments to?
I want to save on interest but raise my credit score at the same time. Do individual credit card utilization matter or is it the over all utilization that affects credit? I have 5 credit cards all of them have different APR. Should I put extra money towards the highest APR, or the card with the highest utilization?
- curtisports2Lv 71 year agoFavorite Answer
ALWAYS pay down the one with the highest interest rate first, while making at least the minimum payments on the rest. Your utilization rate is not affected in a major way unless you close an account after paying it off - thereby 'losing' that available credit. That can make your utilization rate go UP. You just stop using that account - cut up the cards if you think temptation might be too strong - but do not close the account.
Once you have four or all of the five paid down to zero, then you can think about closing accounts. You should always know what your total available credit is and then you can manage your utilization rate and try to keep it below 10% at all times. If you think you might need to make a major purchase that could take your utilization rate past 30% or even worse, 50%, then you want as much available credit as you can get. having a lot of available credit doesn't hurt your score. Opening new accounts dings a score temporarily, but using them wisely and letting them 'age' helps your score tremendously. One of the several factors in a score is the average age of your accounts. If you only have a couple of accounts that are only a few years old, that is not great. But if you have seven or more accounts with an average age of seven or more years - that is something you see with people that have excellent credit.
- RICKLv 71 year ago
The one with the highest interest rate
The advice to pay the lowest balance one first comes from a conman with multiple bankruptcies by the name of Dave Ramsey
- 1 year ago
The one with the lowest balance and then go to the next one with the larger balance.
For now, forget about credit scores.
- NeverLv 71 year ago
Highest rate. But you seriously screwed up having balances on 5 cards.
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- oklatomLv 71 year ago
Pretty much your choice. In my case I started with the one with the lowest balance first because it paid off the fastest and gave me that sense of accomplishment. Then I took that additional amount and started applying it to the next highest until it paid off did the same with the next until I was out of debt.
Once you get there no need to close them, just don't run then up again. Closing them lowers your score.
- A.J.Lv 71 year ago
Highest APR paid off first. Paying interest does not raise credit score. Being in good standing on all accounts slowly raises score. Having multiple accounts OF DIFFERENT TYPES raises credit score. Oldest active account raises credit score keeping it in good standing. Pay all bills as money received by creditor before the due date as minimum due at least. Extra money goes to debt with the highest APR. When that is paid off, extra money goes to next highest APR. When card is back to interest-free grace period that is the card to use for daily REQUIRED expense and pay it 100% to keep it interest-free. Reduce expense anywhere possible. Keep oldest card active when in its grace period by paying full balance on statement close avoiding interest.
Percent of total credit line in use affects the score as a temporary number that changes every month.
- MichaelLv 71 year ago
Forget your credit score. Save yourself interest. As you pay down your balances, your credit score will take care of itself.