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New Guy, Challenge to The Credit Gods, Need to Pay Down $90,048 CC Debt Smartest Way Possible to Save Money While Paying Down???

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Ok everyone, my first post here and I NEED help! ūüôā

 

I have $90,048 of CC debt across 10 cards with interest rates ranging from 11.9%-24.9%

 

Card        Balance        Limit         Rate

1             $23000         $23500     24.9

2             $8388           $9000       23.9

3             $4044           $4300       22.9               

4             $2493           $2600       22.2

5             $6700           $7500       20.9

6             $8200           $8200       20.7

7             $6785           $9500       20.2

8             $2014           $2250       16.9

9             $18549         $19000     12.9

10           $9875           $10000     11.9

11           $0                 $1500       27.2

12           $0                 $3050       24.9

13           $0                 $2200       20.2

 

Long story short, I am usually very good on my financial decisions but the last two years have been crazy with family issues, medical stuff etc.  I knew that I would eventually get to a point where all the issues would flatten out and a promotion at work was on the horizon.  Well, luckily there is no need to be bleeding out money anymore and the promotion has been realized so i can now start to aggressively get back to $0 CC debt.  

 

My current calculations show that with my current income and as long as nothing crazy happens in the next couple of years that I could have all of this paid off by 9/2022 if I just focus on the the high rate cards first and work my way down.  This calculation includes the interest as well so it is a solid calculation.

 

My initial thoughts were to just start with the 24.9% card and start there and work my way down to the last card that has a 11.9% rate.

 

I then starting to think that i could maybe save money by paying down all cards at the same time instead of focusing one at a time to get all cards under maybe 50% utilization at the same time to then apply for a SOFI loan and hopefully get like a 7-9% rate for like $50k loan to pay off the rest of the CC debt and only be paying on a personal loan at a lower rate.

 

3yrs ago prior to me jacking up all the cards when i had zero CC debt and one 60 day late reporting my FICO scores were pretty good so if i get my CC utilization down quickly I think my FICO's would get up rather fast and possibly high enough to qualify for a decent rate for a personal loan.  Here are my FICO scores from my "My FICO 3B Report" from 1/2018 when i had 0 CC debt and 1 60 day late reporting:

 

FICO 8:  Equi: 688   Trans: 695   Exp: 705

 

FICO 5:  Equi: 731   Trans: 735   Exp: 740

 

FICO Auto Score 8:  Equi: 715   Trans: 719   Exp: 717

 

FICO Auto Score 5:  Equi: 734   Trans: 768   Exp: 774

 

Since then I have zero lates on my records, my credit age has gone up considerably since I have not shopped for new credit in last 3 years so the only thing obviously seriously holding back my scores is the atrocious CC utilization.  Based off this i think once utilization goes down my FICO's will be looking great.

 

Current FICO's with the like 88% CC Utilization:

 

I have not paid for my 3 B report since 1/2018 so the scores below are from my various CC companies or CU's that provide scores to me monthly:

 

Nasa Fed CU:  724 (Experian)

AMEx CC:        611 (Vantage 3.0 Score)

BofA CC:         683 (Transunion)

Capital One:   611 (Vantage 3.0 Score)

DCU:              687 (Equifax FICO 4)

Discovery:      683 (Transunion FICO 8

Barclay:          683 (Transunion)

PenFed CU:    663 (Equifax FICO 9)

 

I have a home with a mortgage in perfect standing but no room for an equity loan to cover this debt so would have to go for a personal loan.

 

i guess another option would be that as utilization goes down and FICO's go up to look for CC's that have 12-18 month 0% balance transfers offers and focus on the cards that have interest being charged.

 

How would you approach this situation to come out with more money in your pocket in the end?

 

 

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This is a well-thought-out first post.  :good:  

 

Mathematically, if you were only to focus on paying down the balances where they currently sit, highest -> lowest APR would be the only answer, but the hybrid approach you suggested has merit, because at some point (that's difficult to pinpoint now), as your utilization gets under control you'll have better alternative options.

 

Before diving into the details, and this may be a longshot since your current issuers are likely softing you with justifiable anxiety every ~30 days, are there any BT offers on your zero-balance cards?  Even if the APRs are only mildly awful, they might at least be a modest improvement (but make sure to factor in any BT fee).

 

Also not a strong option, but worth checking, is if you have any mildly awful consolidation loan options (Lending Club, local kredit younyun, etc.), even for only part of your outstanding balances.

 

The other thing to consider besides priority of debt is looking at where else you're spending money and see what can be redirected (re-shop your insurance, cut cable, downgrade your internet speed, move your mobile phone plan to a MVNO, cancel a couple of streaming services/subscriptions, have your house cleaned less often, whatever is relevant to wherever your other money is going).

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2 hours ago, cv91915 said:

This is a well-thought-out first post.  :good:  

 

Mathematically, if you were only to focus on paying down the balances where they currently sit, highest -> lowest APR would be the only answer, but the hybrid approach you suggested has merit, because at some point (that's difficult to pinpoint now), as your utilization gets under control you'll have better alternative options.

 

Before diving into the details, and this may be a longshot since your current issuers are likely softing you with justifiable anxiety every ~30 days, are there any BT offers on your zero-balance cards?  Even if the APRs are only mildly awful, they might at least be a modest improvement (but make sure to factor in any BT fee).

 

Also not a strong option, but worth checking, is if you have any mildly awful consolidation loan options (Lending Club, local kredit younyun, etc.), even for only part of your outstanding balances.

 

The other thing to consider besides priority of debt is looking at where else you're spending money and see what can be redirected (re-shop your insurance, cut cable, downgrade your internet speed, move your mobile phone plan to a MVNO, cancel a couple of streaming services/subscriptions, have your house cleaned less often, whatever is relevant to wherever your other money is going).

Yes all great suggestions!

 

Already down to bare minimum now on monthly expenses and forecasting about an extra $5k a month from here forward so i should be able to make quick work of the debt but just trying to see what the smartest way to go about it to save some money in the long run.  

 

No BT offers on the $0 cards and haven't shopped for any consolidation loans yet but might be worth checking since they can take into account that the loan will be fully to pay for CC debt and will then lower my monthly liability increasing the chances of paying the consol loan off.  My payment history is Exceptional so that should be taken into account too.

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With 10/13 at 20% or better, killing one card at a time is really no different than paying on each one, which you have to do anyway to avoid default. I would work on getting those interest rates down; perhaps if you talk to them and blame it on Covid, they will do that for you. You're giving them close to 18K a year in interest now. That is hard to overcome. A 50-90K personal unsecured loan ain't likely.

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3 hours ago, legaleagle2012 said:

With 10/13 at 20% or better, killing one card at a time is really no different than paying on each one, which you have to do anyway to avoid default. I would work on getting those interest rates down; perhaps if you talk to them and blame it on Covid, they will do that for you. You're giving them close to 18K a year in interest now. That is hard to overcome. A 50-90K personal unsecured loan ain't likely.

Is there any negative reporting for reducing a rate on a card if they agree?  Worth a try if no negative reporting

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As I recall, card issuers have to show a minimum that includes 1% of outstanding balance plus the interest and fees for the statement period.  So with the APR's on some of those cards, roughly two out of every three dollars is going just to debt servicing.  The excess payment amounts should certainly be going to the higher interest cards unless you just like paying interest.  

 

That said, if you can toss an extra $25-50 to each of the low interest cards, that helps, even if it seems on the face like just drops in the bucket.  

 

You indicated no 0% offers, but are there ANY offers on the cards with no balance?  Also, if you have a small, local bank, it would be worth plopping down in front of one of the lending officers who can actually make decisions.  You won't get a loan for the full nut, but you might be able to get a short-term loan with single-digit APR for $15-20K.  If you actually have the $5K a month to plow into the outstanding amounts, then you can clear that inside of a year and then rinse, lather and repeat.  The good history with the bank could also help prop up a local avenue when you pursue the mortgage.  And while small, local CU's have their place for some, I am talking small, local BANK...staffed by local people who help those in the local community.  You don't get that at the mega-banks as they often churn their staff and often don't have the local discretion on lending decisions...  

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2 hours ago, TravelNut said:

Is there any negative reporting for reducing a rate on a card if they agree?  Worth a try if no negative reporting

You run the risk of them closing the account if they sense fiscal distress as the reason for requesting a reduction...and a closed account with a balance is a score-killer. 

 

If you call to seek a reduction, I would be inclined to couch it in terms of 'since the Fed has kept rates so low, I wanted to see if a reduction on the margin existed.' The phone drone will be confused and ask what you mean, at which time you discuss the spread attached to the current rate to arrive at the APR on the card.  This has the potential to come across as an informed consumer as opposed to one who is maxed out all across the board...

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2 hours ago, centex said:

As I recall, card issuers have to show a minimum that includes 1% of outstanding balance plus the interest and fees for the statement period.  So with the APR's on some of those cards, roughly two out of every three dollars is going just to debt servicing.  The excess payment amounts should certainly be going to the higher interest cards unless you just like paying interest.  

 

That said, if you can toss an extra $25-50 to each of the low interest cards, that helps, even if it seems on the face like just drops in the bucket.  

 

You indicated no 0% offers, but are there ANY offers on the cards with no balance?  Also, if you have a small, local bank, it would be worth plopping down in front of one of the lending officers who can actually make decisions.  You won't get a loan for the full nut, but you might be able to get a short-term loan with single-digit APR for $15-20K.  If you actually have the $5K a month to plow into the outstanding amounts, then you can clear that inside of a year and then rinse, lather and repeat.  The good history with the bank could also help prop up a local avenue when you pursue the mortgage.  And while small, local CU's have their place for some, I am talking small, local BANK...staffed by local people who help those in the local community.  You don't get that at the mega-banks as they often churn their staff and often don't have the local discretion on lending decisions...  

No BT offers on any cards at all.

 

Yep, will try the local bank idea, couldn't hurt, thanks!

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2 hours ago, centex said:

You run the risk of them closing the account if they sense fiscal distress as the reason for requesting a reduction...and a closed account with a balance is a score-killer. 

 

If you call to seek a reduction, I would be inclined to couch it in terms of 'since the Fed has kept rates so low, I wanted to see if a reduction on the margin existed.' The phone drone will be confused and ask what you mean, at which time you discuss the spread attached to the current rate to arrive at the APR on the card.  This has the potential to come across as an informed consumer as opposed to one who is maxed out all across the board...

Yeah I don't think I will be trying this because I don't want to rattle any cages and have them close one of my cards.  Bofa decided to do that all on their own and closed my account with them and Barclay took my Max limit on their card from $20k down to $3050 and I don't need that happening to the others at all.

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If one of your higher limit cards is one that typically offers balance transfers maybe pay that one down completely first and see if you get the BT offer.

 

When you start paying down though watch for them to balance chase you and drop your limit.  If they do that then pay that card down last.  My preference would be to close any account that balance chases you because that's just rude ;)

 

If neither of those ideas work then just start plugging away at it.  You have a workable plan and paying down that level of debt that quickly is admirable.

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3 hours ago, monacho said:

If one of your higher limit cards is one that typically offers balance transfers maybe pay that one down completely first and see if you get the BT offer.

 

When you start paying down though watch for them to balance chase you and drop your limit.  If they do that then pay that card down last.  My preference would be to close any account that balance chases you because that's just rude ;)

 

If neither of those ideas work then just start plugging away at it.  You have a workable plan and paying down that level of debt that quickly is admirable.

Good point to watch for the balance chasing and tell them to F off once I'm paid off to them

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Yes, excellent first post. Rare. Too rare.

 

@centex point of throwing in extra bucks beyond the min is a great idea.

 

When you start, whether highest interest rates first or more evenly, pay at least twice the minimum on each card. This has the best chance of reducing the risk of balance chasing. It's well established that people that pay more than the min. have significantly lower risk than they would based just on FICO scores.

 

 

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16 hours ago, cashnocredit said:

Yes, excellent first post. Rare. Too rare.

 

@centex point of throwing in extra bucks beyond the min is a great idea.

 

When you start, whether highest interest rates first or more evenly, pay at least twice the minimum on each card. This has the best chance of reducing the risk of balance chasing. It's well established that people that pay more than the min. have significantly lower risk than they would based just on FICO scores.

 

 

Yep good point, this would get me out of a high risk bucket if I'm in one and keep me out till the end.  Thanks for the feedback!

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