To improve credit, should I pay my closed credit card with balance or open credit card with balance?
I have one credit card that was closed but has a balance on it. I have another credit card that is open with a balance on it. Interest rates are the same. On the open card, I am near my credit limit. The closed credit card account has no credit available, just a balance. To improve my credit, should I pay-off the open account or closed account first? I have the ability to pay off both within 6 months, and am going to just pay the minimum on one while I devote the rest of the money to the other until it is paid off – then snowball the entire amount into the remaining card.
To be clear, this question is not about what will save interest or how to pay off the card quickest – the question is what will improve my credit faster, paying off the closed account that has a balance, or the open account with a balance that is within 95% of the credit limit.
For informational purposes – the interest rates are similar and the balances are nearly the same.
I’m going to add some details to curtail some responses –
Yes, I know that closing the account hurt my credit. 2 years ago the bank presented a dilemma: keep your card open and pay-off the account at 30% interest, or close the account and pay the balance over time at 9.99% interest. Since my income wasn’t high enough to quickly pay off the balance, I opted to keep the lower interest rate, rather than be choked at 30% interest.
To answer any followup questions to that explanation – no late payments ever, no collections, nothing. I just have a lot of debt and cards are maxed. My income has recently increased dramatically, to the point that I can get everything paid off within 6 months.
As an additional side question – the interest rate on the card that is closed is a point higher than the card that is opened. Does that change how you guys would approach it.