Credit Card Paydown Advice

[jts79]

Hey everyone! I'm looking for the most financially sound way to eliminate my credit card debt in the fastest time possible. I'm aware of the snowball approach, but with my tax refund of $4,400 coming in, I'm curious if there is a better way.

 

My debt and interest rates are as follows: Orchard Bank- Limit: $900, Balance: $880, Rate: 24.9 %

 

Credit One- Limit: $900, Balance: $870, Rate: 18.9 %

 

Capital One- Limit: $3,500, Balance: $3,440, Rate: 16.9 %

 

First Premier- Limit- $550, Balance: $470, Rate: 9.9 %

 

 

I'm planning on using $2,000 to apply to this debt. Should I eliminate the highest interest rates first, or put a dent in the high balance Capital One Card? Any and all approaches are appreciated! Thanks!

[jolla]

Highest rates first. Anything else is wasting money.

[kb1gra]

However, if you are trying to boost your credit score, pay off the two cards that are close to maxed and apply the rest to the cap 1.

 

The utilization on each card counts as does your total utilization, so the fewer maxed cards you have the better your FICO will be. However you will pay slightly more in interest this way.

[Operation_Home_Ownership]

Higher interest rate first.

 

BUT if I were in your situation..I would add an extra $220 to that $2K and wipe out Orchard, Credit One, and Frist Prem altogether.

 

Leaving only the Capital One to deal with combining atleast all the previous minimum payments together to wipe out it quickly.

 

Debt free in 6 mths - 1 yr, dont look back dont re-charge. PIF only going FWD, then opening up new credit at a CU & growing lines.

[jts79]

Higher interest rate first.

 

BUT if I were in your situation..I would add an extra $220 to that $2K and wipe out Orchard, Credit One, and Frist Prem altogether.

 

Leaving only the Capital One to deal with combining atleast all the previous minimum payments together to wipe out it quickly.

 

Debt free in 6 mths - 1 yr, dont look back dont re-charge. PIF only going FWD, then opening up new credit at a CU & growing lines.

 

 

Brilliant Idea! Thanks! That never even crossed my mind to do that! After the cards are paid, should I keep the accounts open or close them? I've always heard to never close a tradeline as it will adversley affect your score.

[Operation_Home_Ownership]

Higher interest rate first.

 

BUT if I were in your situation..I would add an extra $220 to that $2K and wipe out Orchard, Credit One, and Frist Prem altogether.

 

Leaving only the Capital One to deal with combining atleast all the previous minimum payments together to wipe out it quickly.

 

Debt free in 6 mths - 1 yr, dont look back dont re-charge. PIF only going FWD, then opening up new credit at a CU & growing lines.

 

 

Brilliant Idea! Thanks! That never even crossed my mind to do that! After the cards are paid, should I keep the accounts open or close them? I've always heard to never close a tradeline as it will adversley affect your score.

 

DO NOT CLOSE! Just put them away and in due time pursue the CU card [like PenFed] which do not have usuary type rates & practices.

 

Enjoy spending money you actually have off a Debit CashBack Rewards Card [if you have]. Trust it will be awkward at first being FREE, but as you see your other goals come to life HOME SAVINGS, EF, RETIREMENT, etc...you will be excited again for the future HIGHER goals.

Edited January 18, 2010 by Operation_Home_Ownership

[jts79]

Higher interest rate first.

 

BUT if I were in your situation..I would add an extra $220 to that $2K and wipe out Orchard, Credit One, and Frist Prem altogether.

 

Leaving only the Capital One to deal with combining atleast all the previous minimum payments together to wipe out it quickly.

 

Debt free in 6 mths - 1 yr, dont look back dont re-charge. PIF only going FWD, then opening up new credit at a CU & growing lines.

 

 

Brilliant Idea! Thanks! That never even crossed my mind to do that! After the cards are paid, should I keep the accounts open or close them? I've always heard to never close a tradeline as it will adversley affect your score.

 

DO NOT CLOSE! Just put them away and in due time pursue the CU card [like PenFed] which do not have usuary type rates & practices.

 

Enjoy spending money you actually have off a Debit CashBack Rewards Card [if you have]. Trust it will be awkward at first being FREE, but as you see your other goals come to life HOME SAVINGS, EF, RETIREMENT, etc...you will be excited again for the future HIGHER goals.

 

 

 

Thanks so much for the guidance and advice! I will be doing exactly that!

[jolla]

Highest rate first is fastest and saves the most money.

[GEORGE]

Hey everyone! I'm looking for the most financially sound way to eliminate my credit card debt in the fastest time possible. I'm aware of the snowball approach, but with my tax refund of $4,400 coming in, I'm curious if there is a better way.

 

My debt and interest rates are as follows: Orchard Bank- Limit: $900, Balance: $880, Rate: 24.9 %

 

Credit One- Limit: $900, Balance: $870, Rate: 18.9 %

 

Capital One- Limit: $3,500, Balance: $3,440, Rate: 16.9 %

 

First Premier- Limit- $550, Balance: $470, Rate: 9.9 %

 

 

I'm planning on using $2,000 to apply to this debt. Should I eliminate the highest interest rates first, or put a dent in the high balance Capital One Card? Any and all approaches are appreciated! Thanks!

HIGHEST APR NEEDS THE HIGHEST PAYMENT AMOUNT

 

You "MAY" be able to get them to lower the APR with a single phone call (IF YOU ARE LUCKY)

[Kevin20]

Hey everyone! I'm looking for the most financially sound way to eliminate my credit card debt in the fastest time possible. I'm aware of the snowball approach, but with my tax refund of $4,400 coming in, I'm curious if there is a better way.

 

 

Why on earth did you overpay your taxes by $4,400? If that's typical for you, rather than being the result of unusual events in 2009, then the best thing you can do to pay off credit cards is to quit overpaying your taxes by $400 a month, and instead use that monthly income to pay down debt balances.

[hinklesc]

Hey everyone! I'm looking for the most financially sound way to eliminate my credit card debt in the fastest time possible. I'm aware of the snowball approach, but with my tax refund of $4,400 coming in, I'm curious if there is a better way.

 

 

Why on earth did you overpay your taxes by $4,400? If that's typical for you, rather than being the result of unusual events in 2009, then the best thing you can do to pay off credit cards is to quit overpaying your taxes by $400 a month, and instead use that monthly income to pay down debt balances.

 

Many (especially early filers like now) did not overypay by that amount. This is usually because of Earned Income Credit due to children. This is a refundable credit.

[Kevin20]

Many (especially early filers like now) did not overypay by that amount. This is usually because of Earned Income Credit due to children. This is a refundable credit.

 

Ah, I believe you are suggesting maybe the OP paid no taxes in the first place, and is getting a $4400 "refund". If that's the case, yeah I guess he can't adjust his withholdings.

Edited January 19, 2010 by Kevin20

[Bloody but Unbowed]

I agree with the other poster who said to pay the 3 smallest off and then attack the Cap 1 card, I think this would get you the best FICO boost (3 maxed cards to 0 balances) and allow you to focus better.

 

As far as the other posters are saying about interest, I would think the difference would be minimal as even your higher interest cards have lower balances they would be excluded then focus on the 16.90% interest rate Cap 1 card.

 

And for the other posters that are saying those are usury rates, why do you think so? I would think 16.9 is a decent rate for someone without excellent credit

 

Just my .02

[DigitalGeist]

I agree with the other poster who said to pay the 3 smallest off and then attack the Cap 1 card, I think this would get you the best FICO boost (3 maxed cards to 0 balances) and allow you to focus better.

 

Couldn't agree more. Wipe out the other three. Then you can concentrate on Cap 1 and have it paid off in no time.