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What is the better strategy for paying off cc debt if we have multiple cards and received a bonus and have some additional cash on hand?

Scenario 1
Pay the minimums on 2 cards and put the rest to the card with the highest interest rate. This will be the bonus in addition to our regular paychecks.

Scenario 2
Keep the bonus money in cash and use debit card to pay for everything using cash and not adding additional money to the card for a month or two, and use the money from our regular paychecks to put towards the cc debt.

Normally, we use our credit cards for everything we can (gas, groceries, cable, utilities, etc.). I assume we need to try to transition to cash for everything, and whatever cash is remaining, put that towards the cc debt.

All thoughts/suggestions are appreciated!
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No. of Recommendations: 25
What is the better strategy for paying off cc debt if we have multiple cards and received a bonus and have some additional cash on hand?

Scenario 1
Pay the minimums on 2 cards and put the rest to the card with the highest interest rate. This will be the bonus in addition to our regular paychecks.

Scenario 2
Keep the bonus money in cash and use debit card to pay for everything using cash and not adding additional money to the card for a month or two, and use the money from our regular paychecks to put towards the cc debt.

Normally, we use our credit cards for everything we can (gas, groceries, cable, utilities, etc.). I assume we need to try to transition to cash for everything, and whatever cash is remaining, put that towards the cc debt.



Neither Scenario 1 or Scenario 2 is the better way if you are still using cards that you are carrying any debt on. Using a credit card for anything (much less everything) is only a good strategy when you are paying off the credit card in full every month. If you carrying any debt at all on a card that you use for daily purchases, your daily purchases begin to accrue interest as soon as the charge hits your balance, because your average daily balance increases from the additional purchases. Even if you are getting rewards, the 1% - 2% that you may be getting back will likely be completely offset by 1 or 2 months interest charges, depending on your rate.

Additionally, it's very difficult to get out of a hole that you are continuing to dig.

So, you don't need to 'try to transition to cash' you absolutely need to STOP using the credit cards, right now. If you absolutely must use credit cards for something, then you need to start with a credit card that has had a $0 balance for at least one billing cycle, and then, not charge anything to the card unless you have already set aside the money to pay for the item, and pay that credit card off in full each and every month.

Once you have stopped charging on the cards that you are carrying balances on, then you can start paying the minimum payments on all of those cards except the one with the highest interest rate.

AJ
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