If you have three credit cards with varying interest rates and a total balance of $1,500, what is the best strategy if you can only pay $500 this month?

The best strategy in this scenario is to pay the minimum on all cards, rather than fully focusing on one specific card. This approach helps maintain your overall credit utilization ratio, keeping accounts active and in good standing while managing your cash flow.

When you make only the minimum payments, you ensure that all accounts remain current, which avoids late fees and negative impacts on your credit score. It also allows you to use the remaining funds strategically for other essential expenses or to prepare for a larger payment in the future when more resources are available.

The other strategies, such as paying more on the card with the lowest balance, may seem appealing but can lead to potentially missing payments on the higher-interest cards, which could escalate debt due to accumulating interest. Paying an equal amount on each card can result in a slower reduction of your overall debt compared to focusing on the debt with the highest interest if funds were not tight. Finally, prioritizing the minimum on the card with the highest interest may not leave enough room for managing other debts effectively, risking higher finance charges overall if you ignore other accounts.

Thus, maintaining the minimum payment across all cards can be a pragmatic approach in the short term while plotting a more aggressive repayment strategy as financial conditions improve.