Two Basic Theories About Credit Card Repayment
Most advisors will suggest paying off the highest rate credit card first. The method is fairly simple: you order your credit cards from higher rate to lower rate and start paying as much as possible on your highest rate credit card and only the minimum payments on the rest. This process helps you eliminate interest payments and provides you a moderately speedy way of eliminating debt principal too.
The other side of the experts suggest paying off the lower balance credit card first. The idea is to eliminate a whole minimum payment as soon as possible by repaying the highest balance credit card even if it is not the highest rate one. The amount that you used to pay the minimum on that credit card will then be immediately available to help you repay the second lowest balance credit card and so on. This provides moderate interest elimination but reduces debt principal at a higher pace.
The Negotiation Approach
Remember that you are in good stance for negotiating with your creditors. It is not all about just repaying your debt the way they want. They make money out of interests and thus, if you request them to lower your interest rate because another credit card issuer has offered you to transfer the balance and charge you a promotional rate, they will probably come up with a new proposal to keep you as a client. Threatening to close the account because the interests are outrageous is also a good approach. Of course, this is especially effective if your credit repayment history is impeccable with no records of missed or late payments. Each delinquency on your report will turn your negotiation less effective.
You do not necessarily need the aid of a debt management company to have your creditors halt all interests accumulation. It is possible to negotiate yourself a repayment schedule of your outstanding debt and the blocking of your account to limit further use. Ask them about other products as personal loans or lower interest credit cards, you may be able to transfer the balance to a better card or just consolidate the debt with a cheap loan.
Conclusion
The order for repaying your credit card balances is really up to you. You need to ponder the results you want to obtain and the costs associated. If you want to pay less interest or reduce your debt at a greater pace you should put into practice the proper approach. However, remember that you can always get better terms on your current unsecured credit card debt by talking and negotiating with your creditors. Even if you do not get any results, you will not loose anything by trying.
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