Share post
Debt Consolidation Forums Debt Problems forums

Is it mandatory to repay the highhest interest debt first? what is the advantage?

member profile picture
Posts: 1
Credits: 0
[Donate]

I have heard that advisors say to repay the highest credit card debt first, is it mandatory? Doesn;t it make more sense if I can repay 2 credit card with small amounts instead of taking time to pay off a high debt?




Do you mean the highest interest credit card? Usually paying off the highest interest rate credit card debt is good since you will lose on the interest with time. But, you should also consider your income before choosing a repayment option.

If your income is moderate, then you should target the smallest debt first. Remember, you have to make payments on other monthly obligations. So, assess your income before choosing a repayment option. Don't believe in expert's suggestion blindly without analyzing your financial ability.

Sub: #1 posted on Thu, 09/27/2018 - 06:12

sanderspatricia29 sanderspatricia29

(Posts: 747 | Credits: )

  1. List all debts in the ascending order arrangement from the smallest balance to the largest. This is the method’s most distinctive feature, in that order is determined by the owed amount, not the rate of interest charged. However, if two debts are very close in the amount owed, then the debt with the higher rate of interest would be moved above in the list.

  2. Commit to disburse the minimum disbursement on every debt.

  3. Ascertain how much extra can be applied in the direction of the smallest debt, as per the advice debt management

  4. Disburse the minimum disbursement in addition to the extra amount in the direction of that smallest debt until it is paid off. Note that some lenders (mortgage lenders, car companies) will apply extra amounts in the direction of the next disbursement; in order for the methodology to vocation, the creditors need to be in touch with and told that extra disbursements are to go directly in the direction of the principal reduction. Credit cards usually apply the whole disbursement during the current cycle.

  5. Once a debt is disbursed in full, add the old minimum disbursement (in addition to any extra available amount) from the initial debt to the minimum disbursement on the second smallest debt, and apply the new sum to reimbursing the second smallest debt.

  6. Repeat until all debts are paid in full.

Sub: #2 posted on Thu, 09/27/2018 - 22:17

Unregistered


I guess you are talking about the highest credit card debt amount, isn't it? You may try the debt snowball method where you can pay off the accounts starting with the smallest balances first, while paying the minimum payment on larger debts.

Sub: #3 posted on Fri, 09/28/2018 - 06:17

Barbara Delinsky Barbara Delinsky

(Posts: 331 | Credits: )

Nothing is mandatory. Everything depends on you. Got it? If you don't have enough savings, then pay off the credit card with small amounts first. That will give you confidence. It will give you a psychological boost.

Sub: #4 posted on Wed, 10/03/2018 - 21:34

David Martin David Martin

(Posts: 105 | Credits: )

Attachment
More information
  • Files must be less than 500 MB.
  • Allowed file types: txt pdf jpg jpeg png.


Page loaded in 0.990 seconds.