Debt Control - Pay Down Credit Card Debt : APR vs Minimum Payment

March 25, 2006 · Filed Under How to Manage Money

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Credit card debt is one of the most ” famous” debt that all most everyone of us have in life. Get into credit card debt is just as easy as ABC. I think the reason mostly because credit card is attacking the weakess point of human - Emotion. Sometimes it is hard to control our emotion especially when you found something that you like to buy and you know you have a plastic card that let you buy it right now but pay it later.

Anyway, if you cannot stand it anymore, then you must get ready and prepare a plan to pay down your credit card debt. I read a lot of forum and I found that many people ask a question how they should pay down their multiple credit card debts. Pay them according to the APR where the card with the highest APR goes first or minimum payment where the highest payment is the first choice?

My points of views :
If this case happen to me, then I will choose the first option - Pay down the highest APR debt. There are several reasons to do this :

The total amount of debt you going to pay is directly affected by APR. You will have the highest risk with high APR debt because you debt will become bigger easily than other if anything happen.
Some of the highest APR card sometimes has the lower monthly minimum payment. So if you choose the option 2, then this danger debt will be the last one to be paid off.
Anyway, pay the highest APR card is more aggressive than the option 2. In long run, this will be the fastest way to settle down all the credit card debts.

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