It is that time of the year that you use your credit cards to buy holiday gifts and next month you receive your bill from each credit card company. With limited budget, it is obvious that we don’t have enough money to pay off all credit card balances and we have to pick which to pay off first.
One strategy that some people use is to pay off the smallest balance first and pay the minimum on others. Not a bad strategy, but consider the following.
Some advice to pay the credit card balance with the highest interest rate first. Not a bad idea either. This will allow you to save on interest charges. However, you may not get the same satisfaction as having one less card to pay if you can’t pay the entire balance.
Your credit card balances as well as the number of credit lines open have a direct link to your credit score. If your balance is closer to the limit and you have too many cards, you may get a lower score. Also important is the payment when it is due. Late payments could result in a lower score. One strategy is to maintain a balance no more than half of the limit.
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