Should I split up the cash and pay something on each card? Will I get a lower interest rate for making such a large repayment?
A:You benefit most by paying off the highest APR card in full. But, in doing so, you must remember to also make the minimum monthly payments on the other cards. By using this approach you reduce the total amount of interest you will pay, and because you made your payments to each of the card companies on time, you also avoid any punitive actions by the card companies.
Once you have paid off the highest APR card, try not to use that card for any future purchases (Also, be careful not to make additional purchases that will put you over your limit on any of the cards. The fees for going over limit are quite high.), and focus on repaying the next highest APR card, while continuing to make the monthly minimum payments on the other, lower APR cards.
You are most likely to be successful negotiating a lower APR if your balance has been paid in full. The card company has access to your credit bureau records, so they know that you have a large amount of credit card debt (both on their card and the cards issued by other banks), and they know that most people in that situation can't pay off the debt and therefore have no choice but to pay a high APR.
But, once you have paid off a couple of cards in full, they will be more willing to consider lowering your APR.
Labels: Payment Advice
«Continue»
Want to benefit from inside information directly from credit experts?