I have three credit cards and the one with the biggest limit is just about maxed and the other two have balances as well. Is it best to pay the largest one first and keep making min. payment on the small ones or is it better to pay off the smaller ones, and use that same amount after they are paid off to put on the one with the higher balance?

answer

The answer is - neither, says Jasmine Birtles of Money Magpie.

The important thing about credit card debts isn't the amount you owe but the APR (annual Percentage Rate - or interest rate) that each one charges.

Have a look on the bills for each one - what are the APRs for each credit card? Now write them down in a list starting with the one with the highest APR (maybe it's one that's at 21%), then the next highest (maybe it's 18.5%) and then the cheapest (maybe it's 15%). It doesn't matter how much you owe on each one.

Then you should put as much money as you possibly can into the most expensive one (the top one with the highest interest rate) each month and just pay the minimum off on the others. Keep doing that until you have paid off the top one then do the same to the next one (just paying the minimum on the last one). As soon as you have paid off the second most expensive one you can put all your money into the last one and you will have paid them all off.

This is the cheapest and quickest way to pay off your debts.

Remember, though, it might be worth seeing if you can switch some of your balances to 0% or low-lifetime-balance rate credit cards first which will make it even cheaper. You can find the best 0% cards here www.moneymagpie.com/

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What's the cheapest way to pay off credit card debt?