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Paying down credit cards


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Quick question: I recently got my bonus check from work and I want to pay off or pay down my credit cards. My check is only for $3000 but my balances are below:

 

500 limit/497 bal

750 limit/738 bal

1000 limit/997 bal

500 limit/450 bal

660 limit/400 bal

5000 limit/3550 bal

1000 limit/960 bal

 

I know that I can't pay them all but I want to pay the ones that will make the most impact. Should I pay a little on all of them or pay off certain ones and keep balances on a few?

 

TIA :)

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How long have they been maxed out like that? If its been a little while, you run the risk of being balanced chased or other AA.

 

Personally, I would try to get as many as possible at least under 70%, or lower if possible (I'm not crunching the numbers right now). Overall utilization and individual utilization are both important. So, even if you pay a few cards off completely, you are still going to be maxed out on the others.

 

However, if your sole goal is getting them paid off with as little money as possible (as opposed to trying to get your score up)pay higher interest rates first.

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Just as a breakdown

The total of your limits is $9410 and balances $7592.

 

3k will take out most of that.

 

You have 5/7 cards over 90% Utilization with a combined balance of $3642 and combined limit of $3750.

 

The best answer to your question is dependant on your goals.

 

If you want to save the most money: (Best Option)

order your cards by highest interest and pay them off that way.

 

If you are looking to improve your scores the most: (Not recommended)

pay off the 400, 450, 497, 738 and the rest toward the 960. (3045 will pay all of these)

 

Having fewer cards with balances will improve your scores but your overall UT% won't let you max your scores.

 

However, your scores shouldn't matter right now because if you are maxing that many cards there are other problems that need to be handled first.

 

Also, the reason I say the first option is the better one is that if you save money by paying less or no interest scores will follow.

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depends on her rates on the 5k card

Paying anything but the highest interest rate first costs more money.

 

+1

 

Although, paying off the smaller balances first does help some people psychologically because they have less to worry about.

Edited by Demonico
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Quick question: I recently got my bonus check from work and I want to pay off or pay down my credit cards. My check is only for $3000 but my balances are below:

 

500 limit/497 bal

750 limit/738 bal

1000 limit/997 bal

500 limit/450 bal

660 limit/400 bal

5000 limit/3550 bal

1000 limit/960 bal

 

I know that I can't pay them all but I want to pay the ones that will make the most impact. Should I pay a little on all of them or pay off certain ones and keep balances on a few?

 

TIA :)

I don't worry about the interest, I would be paying off a bunch of those 'little' balance ones..this will cut down the # of payments you make every month + give you a feeling of achievement.

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If it were me I would pay off as many small ones as I could and then split the rest among the others.

 

Having some report as zero is great for your scores. With $3000 you could pay off 5 of them!

Edited by amandal0514
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depends on her rates on the 5k card

Paying anything but the highest interest rate first costs more money.

 

+1

 

Although, paying off the smaller balances first does help some people psychologically because they have less to worry about.

 

I agree. Sometimes saving a little bit of interest money isn't worth it... it all depends on the person... OP could pay off 5 of them easily

 

500 limit/497 bal

500 limit/450 bal

660 limit/400 bal

750 limit/738 bal

1000 limit/960 bal

 

that will also put a bunch of highly utilized cards at 0%...

The money they save on those 5 payments each month, can be rolled into what remains and pay off quicker!

 

5000 limit/3550 bal

1000 limit/997 bal

 

the next one I'd work on is the 1000/997 unless it's a 0%. Get that utilization down.

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Thank you all for your help! :) The highest rates are on the Cap 1 cards which are the 750 and 500, and also a Victoria's Secret card (660). I'd really like to PIF those 3 for sure. I'm still concerned with raising my scores but right now I just want to get my util down. I didn't know if paying down the 3 higher cards (5k and both 1k) would help with that or not. They all have the lowest rates right now (all with NFCU).

Edited by lakegro
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You have lots of maxed credit cards and quite a number of blemishes on your credit files.

 

If I were you, I wouldn't worry about FICOs and credit limits at all and just pay down the highest interest cards first. Then figure out ways to not re-accumulate debt. FICOs will eventually improve once you get your finances in order.

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You have lots of maxed credit cards and quite a number of blemishes on your credit files.

 

If I were you, I wouldn't worry about FICOs and credit limits at all and just pay down the highest interest cards first. Then figure out ways to not re-accumulate debt. FICOs will eventually improve once you get your finances in order.

I do, indeed. I don't have any need for raising my scores right now because I am not applying for any new credit for a while. My husband lost his job in Feb. and we fell onto hard times, using our cards to stay afloat. He is actively looking for a new job but times have been pretty rough for me, busting my butt to make sure bills are paid on time. Fortunately, things have been going fairly well for me at work the last 2 months and this bonus check will help tremendously. I just wanted to lessen the burden on me.

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I had 5 out om 6 cards with a substantial balance. I worked on the smaller ones and sock drawered them as soon as they were paid off. Next check I'll be down to my last card. I found it easier this way but I could see putting it on the 3550 card and then working on the others.

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Just as a breakdown

The total of your limits is $9410 and balances $7592.

 

3k will take out most of that.

 

You have 5/7 cards over 90% Utilization with a combined balance of $3642 and combined limit of $3750.

 

The best answer to your question is dependant on your goals.

 

If you want to save the most money: (Best Option)

order your cards by highest interest and pay them off that way.

 

If you are looking to improve your scores the most: (Not recommended)

pay off the 400, 450, 497, 738 and the rest toward the 960. (3045 will pay all of these)

 

Having fewer cards with balances will improve your scores but your overall UT% won't let you max your scores.

 

However, your scores shouldn't matter right now because if you are maxing that many cards there are other problems that need to be handled first.

 

Also, the reason I say the first option is the better one is that if you save money by paying less or no interest scores will follow.

 

^This very good advice.

 

At this point you should pay the highest interest cards first. This gives you the best opportunity to get your debt under control since it reduces the ongoing cost of it more than any other strategy. Work on maximizing your profile for FICO scores is desirable once your debt is stabilized and trending down and your FICO scores will reflect that then. Until then scores simply are secondary (at best) and really useful only for getting additional credit which might be an invitation to dig a deeper hole.

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Thank you all for your wonderful advice! :) I will be sitting down this evening to analyze what the best plan of attack is based on everyone's comments. I can always count on CB to give me honest feedback. You all ROCK!

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I don't know what your financial situation is, but if I was in your situation with all these balances and had 3K to use to pay off cards, here's what I would do.

 

"

500 limit/497 bal

750 limit/738 bal

1000 limit/997 bal

500 limit/450 bal

660 limit/400 bal

5000 limit/3550 bal

1000 limit/960 bal

 

"

 

I would PIF as many small cards as you can and make 3x the mins on the other cards..

 

 

It might be just me, but the thought of having one less card to have to pay monthly, is a great feeling and a lot less pressure

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You might consider paying down all the cards to 79% first. Or 69%. (80 and 70 are the %s that are cited as being "maxed out".)

 

This will improve your "internal score" with each lender. i.e. make you look like a less risky customer.

 

This will make it easier to obtain credit limits increases in the future, and increase your ability to get premium cards from them in the future.

 

Then, pay the others down however you like.

 

It sounds, though, that you may also need to reign in spending for a couple months. And be careful not to buy unnecessary stuff now that your maxed-out cards will no longer prevent you from overspending.

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Paying them off, no matter how you do it, is great .. but not if you turn around run them up again.

 

Before you take that whole $3000 to pay off debt, maybe consider dropping $500 in a savings account for a rainy day.

 

I'm sure some will question this logic instead of saving interest $$ by using that $500 to pay down debt;

The reason is this, if you have savings for those small things that happen (dead car battery etc), it helps you 'break the cycle' of whipping out a credit card every time you have a problem coming up with $50-$100 for something you need....

 

I speak from experience on this!

Edited by Cactus Flower
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  • 2 weeks later...

IMO, depending on the rest of your credit profile, I'd pay OFF all balances under $900. Then I'd pay $300 on each of the $1k cards and throw the rest at the $5k card. Once those report, I'd get another card that is offering 0% for 12-18 months and transfer all of the remaining balances to it. Then pay like heck until it's gone and stay away from the credit cards in the meantime.

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