Where do I dump $6,000?

Where do I dump $6,000?
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I have about $6,000 to apply to some outstanding credit cards. While it’s not enough to pay off everything, it’s enough to make a dent. I’m wondering if it would be better to get everything down to 30-50% utilization or pay a couple totally off, leaving everything else the same?


Welcome, atlpt1870! And good for you for being willing to apply that money to credit card bills.

People have different ideas about how best to pay off debt, and part of it is what would be most motivating to YOU. If it were me, I would probably apply it to the bill with the highest interest rate (that method is called the debt avalanche). Other people prefer the debt snowball, where you pay bills going from smallest to largest, eliminating balances as you go. If small victories right away are more motivating to you, pick that one.

Ultimately, the best thing for your credit is to use your cards lightly (no more than 30% at any point in the billing cycle for any one card) and to pay in full every month. But that’s not realistic for you right now. While you pay down the debt, your best bet for improving your score is to pay every bill on time every time and to keep the cards open if you reasonably can. (Closing cards after you pay them off can actually damage your credit score.)

Hope that helps. Please let us know if we can help further.


Agree with Bev: I’d knock off that high-interest card first so that you’re not throwing more money at interest.

The other thing I’d say – and this will help with keeping your card utilization low – is to put some of that money away in an emergency fund if you don’t already have one. That will keep you from turning to your cards when an expense pops up and undoing all the good work! We recommend keeping about $500 aside as a start.

Good luck and let us know what you decide to do!