I owe money on 2 credit cards. Currently $6900 (was $9000) on a MasterCard with an interest rate of 24.99%, and $3800 (was $6200) on an Amazon MasterCard with an interest rate of 19.99% (these figures are rounded).
Background: I lost my job in Janaury, and have since been relying on a combination of minimum wage employment and my little savings to cover my rent and bills. I made just enough money to cover my rent and utility, but had to cancel my wifi (went to the library or community centre for wifi) and instead of buying groceries, I've been going to the food bank and soup kitchen in my city. As a result of being extremely strapped for cash, I've been neglecting payments on both of these credit cards.
Currently: I started a new job in June, making $50k/yr before taxes, and have managed to save a total of $4000 by this point. Moving forward, I've calculated that I'll be able to save approx. $1800/month because I've eliminated major expenses outside necessary bills and groceries.
I've done some research and I understand there are two approaches to paying off credit card debt, the avalanche or snowball method. However, I am not sure which method might be the most suitable given my circumstances, which is why I'm turning to Reddit (and other sources of counsel) to consider various perspectives in order to make an informed decision.
Should I use the $4000 to pay off the $3800 credit card immediately, and focus on reducing the debt on the larger credit card over the next few months, or would you guys recommend I make partial payments on both at the same time due to the high interest rates?
I understand the impact this has on my credit score, however I'm not focused on that at the moment. I'm just looking for the fastest/smartest way to get both cards to zero then I can start focusing on rebuilding my credit. Any advice you guys can provide (in relation to paying off the cards) would be greatly appreciated, thank you!
Submitted July 20, 2023 at 04:57AM by ulovesylviee https://ift.tt/M4u76pW
