Several cards, one budget: which card to pay first

Cover every minimum before you rank anything

Before you decide which card gets extra money, make sure every card gets at least its minimum. A missed minimum can trigger a late fee and, on many cards, a higher penalty APR that applies to the whole balance. Ranking cards only matters for the money left over after the minimums are set.

If your budget cannot cover every minimum this month, that is a different and more urgent problem than ordering extra payments. Call the card issuers directly and ask about hardship options before a payment is due.

Why the highest-APR card usually goes first

Once minimums are covered, the card charging the highest interest rate is the one growing your total debt the fastest. Sending extra money there first cuts the balance that is costing you the most, every single month, so this order tends to produce the lowest total interest paid by the time everything is gone.

This is sometimes called the avalanche method. It does not care how big or small a balance is, only how expensive it is to carry.

How to rank your cards this week

You do not need special software to build this list. A sheet of paper or a spreadsheet works.

1. Pull the latest statement or app screen for every card and write down balance, APR and minimum payment.
2. Note any card with a promotional or deferred-interest rate, and write down when that rate ends.
3. Sort the list by APR, highest to lowest, ignoring balance size for a moment.
4. Add up your minimums and subtract that total from what you can afford to pay across all cards.
5. Send the leftover amount to the top card on the list until it is gone, then roll to the next one.
6. Redo the list whenever a card's rate changes or a promotion is about to end.

When a promotional balance jumps the line

A card with a 0% or reduced introductory rate can look like the last thing you need to worry about. It is not, if the offer is deferred interest rather than a simple promotional rate. With deferred interest, missing the payoff date can mean interest is charged retroactively on the full original amount, not just what is left. Check your card's terms for which type you have.

Treat that end date like a deadline that outranks APR order. Work backward from it: divide the remaining balance by the number of months left to see what payment clears it in time, and make sure that amount is covered before extra money goes anywhere else.

The case for smallest balance first instead

Some people do better paying off the smallest balance first, regardless of rate. This is the snowball method, and it usually costs a bit more in total interest than the avalanche order. What it buys instead is a closed account sooner, which can be the difference between sticking with a plan and abandoning it.

There is no wrong answer between the two. Pick the one you will actually follow for the next year, since a plan you quit on saves nothing.

Common questions

What if two cards have almost the same APR?

The interest difference will be small either way, so pick based on which payoff would feel most motivating, such as the smaller balance. The total interest cost barely changes.

Should I close a card once I pay it off?

Not automatically. Closing an account can affect your available credit and the length of your credit history. Weigh that against any annual fee before deciding, and check your own credit profile.

Can I split the extra money between two cards instead of picking one?

You can, but splitting it usually stretches out payoff time on both and adds a little more total interest than concentrating the extra payment on one card at a time.