0
You should pay off the higher interest debt first plainly because they will cost you more money if you payed of the lower interest debt first. Another thing to take into account is how large the debt is because if that is the case then you should pay off the larger debt. :)
It would make sense to pay of the higher interest debts before the lower ones.
That could save you a lot of money.
A credit card loan of 20.000 mounts up to roughly 50.000 in less than five years if not payed down on. This is mainly due to a very high interest rate. often 21-24%, sometimes even more.
If being able to convert it to a low interest loan in a bank, say of 4%, then it would only mount up to 25.000 in the same time.
It makes sense to me to rather have to pay 25.000 than 50.000
regards.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
What are the disadvantages to unsecured debt?
The disadvantage to unsecured debt is the payment of higher interest compared to the lower interest rate offered by a secure debt. Unsecure debt is a debt that is guaranted only by word. If a person fails to pay this debt the bank can file a lawsuit agaisnt and people will unfortunately not be able to sell their home.
Why is it advisable to consolidate debt for a credit card?
It is wise to consolidate debt for credit cards when the debt is at a high interest rate, a person may take all the high interest rate debt and combine it into one debt with a lower interest rate to save money.
What is a good interest rate for debt consolidation loan?
Generally interest rate for debt consolidation remains low. But it also depends on different companies and their policies. They also lower your credit card interest payment up to 60%. By consolidating your debt you are paying one monthly payment, which is lower than all the payments you are paying to creditors. The debt consolidation agency uses this payment to pay off the actual debt and the interest on the debt.
Can you pay off a higher interest loan before lower interest one on your credit card?
Somewhere in the fine print of your agreement with a credit card, they clearly specify that your payments will be always applied to lower interest rate loans first, and anyone who has a credit card must have agreed to these conditions. Unfortunately, very few people read these lengthy and wordy agreements. Remember that you must continue to pay the minimum on the lower rate loan for your credit record to be in good standing. If possible, move the higher interest debt to the a different, lower rate card. This way, you may save a lot of money.
How does the interest rate on new debt influence the use of financial leverage?
The higher the interest rate on new debt, the less attractive financial leverage is to the firm
What are the disadvantages to unsecured debt?
The disadvantage to unsecured debt is the payment of higher interest compared to the lower interest rate offered by a secure debt. Unsecure debt is a debt that is guaranted only by word. If a person fails to pay this debt the bank can file a lawsuit agaisnt and people will unfortunately not be able to sell their home.
Why is it advisable to consolidate debt for a credit card?
It is wise to consolidate debt for credit cards when the debt is at a high interest rate, a person may take all the high interest rate debt and combine it into one debt with a lower interest rate to save money.
What is a good interest rate for debt consolidation loan?
Generally interest rate for debt consolidation remains low. But it also depends on different companies and their policies. They also lower your credit card interest payment up to 60%. By consolidating your debt you are paying one monthly payment, which is lower than all the payments you are paying to creditors. The debt consolidation agency uses this payment to pay off the actual debt and the interest on the debt.
Can you pay off a higher interest loan before lower interest one on your credit card?
Somewhere in the fine print of your agreement with a credit card, they clearly specify that your payments will be always applied to lower interest rate loans first, and anyone who has a credit card must have agreed to these conditions. Unfortunately, very few people read these lengthy and wordy agreements. Remember that you must continue to pay the minimum on the lower rate loan for your credit record to be in good standing. If possible, move the higher interest debt to the a different, lower rate card. This way, you may save a lot of money.
How does the interest rate on new debt influence the use of financial leverage?
The higher the interest rate on new debt, the less attractive financial leverage is to the firm
What is the interest rates for debt consolidation loans?
Interest rates for debt consolidation loans can vary dramatically based on your credit. If you can get a home equity loan they usually have much lower interest rates. For a debt consolidation loan expect to pay around 10-12% interest.
How can you get your debt lowered?
Getting your debt "lowered" can mean many different things. There are several different methods of reducing the total amount of money you must pay to payoff a debt. Options such as lowering your interest, debt management plans, debt settlement, and debt consolidation could "lower" the amount you pay towards your debt. Check out the links below for more detailed information on these topics. There are many ways to lower your debt. • One way, of course, to start curtailing your expenses and live only on the bare essentials for some time to help pay off your debt faster or find extra income by taking on an extra job. • Another way to lower your debt is going cold turkey on the use of your credit card so that you don't incur any more debt on it. • You could lower your debt by paying off the ones which have the highest interest rates first. • You can also transfer your balance on to a new credit card which charges lower interest rates but make sure that company will not charge you higher rates in a few months! • You can also negotiate with the credit card company which charges you the highest interest rates and request them to lower their rates. Most will agree especially if you have a good credit history for the past 6 months at least. For more help, check the link below.
Is it wiser to repay smaller debt of same interest rate first?
Yes, it would be wiser to repay smaller debt of same interest rate first.
What is the truth about debt consolidation?
Debt consolidation is another word for Bankruptcy. It consolidates your bills into one payment and then the company will distribute your funds to your creditors. Debt consolidation will show up on your credit report and debt consolidation. Once entered into a payment plan you will no longer be able to get credit until this is taken care of.
Does higher interest get paid first?
No, there is no rule that loans or bonds at higher interest rates take priority over those at lower interest rates. In bankruptcy, secured debts take priority over unsecured debts. For corporations or governments in bankruptcy, the seniority of the debt also determines the order in which the debts are paid. In both cases, the interest rate is not a determining factor.If you are asking about paying off consumer credit, it is true that it generally works out that paying off the higher interest rate loans (e.g., credit cards) first is the best strategy, simply because the interest on those can make it virtually impossible to make any headway on paying off the total personal debt. Again, that's not a rule, but the arithmetic usually works out that way.
How is personal debt settlement different from debt consolidation?
When you consolidate your debt, you simply combine all of your debts into one loan to lower the payment or interest rate. Personal debt settlement is making an agreement with your creditors to pay them a lower amount.
How can I call to lower my credit card debt?
You can consolidate your loans, which is basically filing for a new loan to pay off your debt, at a lower rate an interest that meets your ability to pay.
