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agreenchile

70k+ CC Payment Strategy

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Hi CB Team,

 

I've been a lurker on these boards for quite some time and was hoping never to find myself in this situation but due to unfortunate life circumstances (I'll spare the details). The good news is I am finally back on track to begin paying down the balances. Below is my planned strategy but would like to know thoughts (I've read to focus on high balance + high APR). My goal is to pay down the balances and try to save my score at the same time. 

 

Creditor	Balance 	CL		Util %		APR

NFCU		22,900		23500		98		11%
NFCU CLOC	14,800		15000		99		16%
Chase		22,000		23000		98		21%
AMEX 		17150		19100		89		19%
Disco/ Cap1 	4k		10k		40%		20%

My strategy based on some reading is to: 

 

  1.  Get all these balances down to 90% Util and hopefully that stops the 20+ point per month my score is dropping (Ficos @ 660 right now). 
  2. Pay minimum payments on all cards. Then apply rest of cash to high APR + high balance. Chase + AMEX

 

I believe this is could save me the most money on interest however, I wanted feedback on this strategy. Another option I read is to: 

 

1. Bring all balances below 90%

2. Pay off small balances

3a. Pay large balances down in turn

-or- 3b. Pay each larger balance to 70%, then to 50%, 30%, 10%, etc.

 

My minimum payments are at 1400/month. I can apply conservatively 4k in cash every month towards these balances. If my job continues to progress that would rise to 6k/month + 20k bonus at the end of year.

 

Are there any other options available that I am not thinking of? I have not called my CC companies to try and reduce interest. To be frank, I'm worried they will flag the accounts?

 

All help and feedback is appreciated. Hopefully this can turn into a use-case for the rest of the community. 

Thanks

 

 

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Your score is already taking a massive hit for utilization, so there is no process to "save your score."  Your scores will only improve no matter which repayment method you utilize.  

 

Minimize interest expenses by paying highest APR first.

 

Nothing to lose by calling and asking for APR reductions.  Each of these issuers is already fully aware of the utilization on their cards -- and your others (they do AR SPs regularly).

 

You may get balance chased for a while.  You can build the limits back later.

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1 hour ago, cv91915 said:

Your score is already taking a massive hit for utilization, so there is no process to "save your score."  Your scores will only improve no matter which repayment method you utilize.  

 

Minimize interest expenses by paying highest APR first.

 

Nothing to lose by calling and asking for APR reductions.  Each of these issuers is already fully aware of the utilization on their cards -- and your others (they do AR SPs regularly).

 

You may get balance chased for a while.  You can build the limits back later.

 

Thanks for the insight.

 

When you mean balance chased. The issuers will reduce limits as I am paying the balances off? If this occurs, the utilization will continue to be impacted, correct?

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17 minutes ago, agreenchile said:

 

Thanks for the insight.

 

When you mean balance chased. The issuers will reduce limits as I am paying the balances off? If this occurs, the utilization will continue to be impacted, correct?

Yes, they may reduce your limits as you pay down the balances, keeping utilization high.  But it's already high!

 

Unless you have an imminent, unpreventable need for other credit, focus on saving the most money possible.  

 

Having an extra 12 points on a FICO score when you don't absolutely need new credit is mostly useless.

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pay highest APR first and let FICO be damned until you are in a stronger financial position. good luck!

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Interesting, I am in a somewhat similar situation myself. However, I'm barely able to get the min payments in.

 

My theory is that I'd benefit from boosting my FICO. This will get me a higher approval rate for 0% balance transer offers.

 

I'm going to try and attach a spreadsheet of (most of) my open credit cards.

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51 minutes ago, moldyearwax said:

Interesting, I am in a somewhat similar situation myself. However, I'm barely able to get the min payments in.

 

My theory is that I'd benefit from boosting my FICO. This will get me a higher approval rate for 0% balance transer offers.

 

I'm going to try and attach a spreadsheet of (most of) my open credit cards.

Here is the spreadsheet.

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On 6/6/2019 at 1:33 AM, moldyearwax said:

Here is the spreadsheet.

I have an eerily similar spreadsheet, albeit not as much total credit lines as you which makes your overall utilization much better than mine. 

 

Financially it makes sense to simply pay off the highest APR. However, originally I wanted to save my FICO in hopes of potentially getting approved for a 0% balance transfer ie: the Chase Slate, thus saving money on interest. My approval odds are dropping by the month as my FICO is currently at 660. With my income I can support the minimum payments plus pay off the balances aggressively. It's just going to take time at this point.

 

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39 minutes ago, agreenchile said:

Financially it makes sense to simply pay off the highest APR. However, originally I wanted to save my FICO in hopes of potentially getting approved for a 0% balance transfer ie: the Chase Slate, thus saving money on interest. 

 

This is sound logic, but I would still start with the highest APRs and adjust your strategy AFTER you've made some significant progress.  

 

I would never discourage someone from waxing a car, but I always recommend at least hosing off the mud first.

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18 minutes ago, cv91915 said:

This is sound logic, but I would still start with the highest APRs and adjust your strategy AFTER you've made some significant progress.  

 

I would never discourage someone from waxing a car, but I always recommend at least hosing off the mud first.

A+ analogy haha, and I agree. 

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As a post-thought at this point, since I've been out of town a while...A lower threshold card at 0% might make more sense than a Slate too.  Maybe like Barf of America's Americard 0% offer, much as I may loathe them, it works.

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The most logical, financially sound thing to do is attack the high interest first, moving from card to card as interest payments change. (Keep in mind that $1000 at 25% interest is still cheaper than the card with $30,000 at 15% interest.)

 

However, some times that strategy can drag out and make you feel like you're not getting anywhere.  If that's the case, start attacking the lowest balances first.  Then you can look at the list and say, ok, that's paid, that's paid... etc.  You may feel a little more accomplished.

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35 minutes ago, Deadbeatloser said:

The most logical, financially sound thing to do is attack the high interest first, moving from card to card as interest payments change. (Keep in mind that $1000 at 25% interest is still cheaper than the card with $30,000 at 15% interest.)

 

However, some times that strategy can drag out and make you feel like you're not getting anywhere.  If that's the case, start attacking the lowest balances first.  Then you can look at the list and say, ok, that's paid, that's paid... etc.  You may feel a little more accomplished.

 unless it is a matter of paying off a few very small balances, paying highest APR is the smart way to go and feelings be damned. :wave:

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12 hours ago, hegemony said:

 unless it is a matter of paying off a few very small balances, paying highest APR is the smart way to go and feelings be damned. :wave:

Plus seven.

 

If you need to blunt your feelings, gin works.

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