$1300 to pay down some CC's. Which ones?

[coloumb]

Common sense advise that everyone else is giving:

#1 - highest interest rate card first
#2 - the next lower interest rate card
#3 - the lowest interest rate card

I don't see how paying them off will hurt your credit? I think closing accounts can affect your credit score though correct?

 

[Pulsar]

You're all wrong. Pay off the smallest one first:

http://www.daveramsey.com/article/get-out-of-debt-with-the-debt-snowball-plan/

Um, bullshit. I wonder how much he was paid to write that article.

Pay off the bill that will end up costing you the most first. Period. It's not about building momentum. Knowing that you just took a big chunk of your money BACK by not having to pay interest should feel good enough. That guy (in the link) is a shill, or an idiot.

 

[jagec]

You're all wrong. Pay off the smallest one first:

http://www.daveramsey.com/article/get-out-of-debt-with-the-debt-snowball-plan/

Those of us who AREN'T 100% run by emotions are far better served by paying off the highest interest first, like everyone has been saying in this thread.

Then again, people who are ruled by logic are much less likely to go into CC debt in the first place, barring an emergency.

 

[Aikouka]

I don't see how paying them off will hurt your credit? I think closing accounts can affect your credit score though correct?

I assume you're referring to comments that I made earlier, and most of things along those lines come from people trying to maximize their FICO scores. From what I was able to dig up again, apparently, you do get a boost (albeit mostly slight) from having at least one revolving account reporting something less than 9% utilization. Everything that I read pretty much said that there was no magical number and that it varied a bit per person.

I'm certainly no expert on this stuff... I'm learning as I read more about it! I'd certainly like to learn more if there's more to this.

Um, bullshit. I wonder how much he was paid to write that article.

Pay off the bill that will end up costing you the most first. Period. It's not about building momentum. Knowing that you just took a big chunk of your money BACK by not having to pay interest should feel good enough. That guy (in the link) is a shill, or an idiot.

I had a friend that used to spout Ramsey's drivel to me, and we even had a nice discussion about fiscal responsibility vs. "The Ramsey Way". I saw him get this package of Dave Ramsey materials, which I assume is how he makes his money. Feeds you some little tidbits on how to properly budget, and then you buy this expensive junk (I think it was a couple hundred dollars -- I'll have to ask) to help you even more.

If I remember right, I looked at him funny after hearing about the cost, and I said to him, "you... could have just spent that money on your debt instead."

 

[Jadow]

pay down whichever one has the highest int, but don't blow the whole 1300. Use about 800 to pay down CC, and put the 500 in savings. With those low balances the int is only a few bucks a month, and you want to keep a bit of a safety net.

 

[Schfifty Five]

You're all wrong. Pay off the smallest one first:

http://www.daveramsey.com/article/get-out-of-debt-with-the-debt-snowball-plan/

Is this Outhouse's alternate account? haha

 

[jlee]

Um, bullshit. I wonder how much he was paid to write that article.

Pay off the bill that will end up costing you the most first. Period. It's not about building momentum. Knowing that you just took a big chunk of your money BACK by not having to pay interest should feel good enough. That guy (in the link) is a shill, or an idiot.

No idea, but with a net worth of $55 million, likely a few bucks.

 

[hans007]

Usually those cards would have a 3-5% upfront fee for cash advances or balance transfers so essentially they are charging you interest upfront. So in my opinion that would not be a good idea.

the fee would be like 3% usually and some of them have teaser balance transfers too.

3% i'm figuring is a lot less than his card charges which is probalbly 13-25%.

you still win.

i guess i'd do something like this http://www.nflextrapoints.com/mvt25/?campaignId=1571&cellNumber=504

you get $200 statement credit 15 months 0% apr . so balance transfer in your balance, $200 statement credit, and then pay 0% for 15 months... adn don't pay interest on your other cards.
gotta get creative to get free money.

for that card in particular its 2.9% balance transfer fee. he has $3100 in debt. so what i'd do is, pay off the best buy card with the $1300 cash so you dont lose 2.9% on it. transfer the other 2 balances of $1800 which will cost 2.9% in balance transfer so $55 or so. get the $200 credit. get 0% APR instead of whatever he's getting on $1800. even if you don't get a $200 on say a different card. $55 effectively interest for 15 months loan is really good compared to whatever he's getting charged at his other 2 cards (hypothetically lets say its 13% on the other $1800... thats over $20 a month)

 

[Timorous]

If you want to be really smart you apply for a card with a 0% interest teaser like say for a year. Cash advance to yourself to pay for those cards and pay those three off.

Then pay the teaser card off . Hell people do this indefinitely rolling over low interest cards . That is if you can qualify and get approved

That is what I do. I currently have around £8,000 of debt that is at 0% interest for the next 8-12 months.

At the end of that period I will either pay it off or I will find another 0% balance transfer card and move the money to that. I have not paid more than £50 interest on my CC's in the last 5 years.

I would do what Hans007 has suggested. Some cards do have offers that they pay you to take them on so you can end up negating the fee and then some if you find a very good deal. Do not forgot that the money that is on an interest free CC is money that did not have to come from your bank so you can earn a little bit more interest on that money meaning by the end of the period you come out ahead.

This is a UK based website so I am not sure if all of the tips there will be of any use but some of it should be at the very least. http://www.moneysavingexpert.com

 

[Doppel]

I had a rough year.. I went from making about $50-80k a year to about $35k per year for the past 2 years. It took me a year to slim down my life style and I ended up racking up about $14k in debt. (the entire time I was thinking I'd get a break just around the corner so that $2k new debt I could pay off soon.. things kind of stacked up a bit).. Things are picking back up at work so I'm starting to see the commissions I was used to. I've been able to discipline myself to live on about $1600 per month (rent, car, gas, living) so anything after that I'm trying to be disciplined enough to pay it all towards debt. It was nice when I was having $2-$3k extra each month (especially when I didn't have any debt).

I figure another 4-5 months and I'll have everything knocked down pretty good. After that I'll probably only owe on the one loan, and at that point I can start (hopefully) putting $1k+ per month down on it until its done. If I have just one really, really good month at work, I could possibly pay everything off in 6 months.

I've not had this experience but I can sympathize with how it could happen.

 

[Timorous]

Then again, people who are ruled by logic are much less likely to go into CC debt in the first place, barring an emergency.

I disagree with this. People ruled by logic will game the system to their advantage.

Take the following scenario that I am currently moving through.

I get a CC with 0% on balance transfers for 18 months and transfer ~ £8,000 to it. The cost to transfer this money was £240 but as I live within my means I have that money sitting in a liquid savings account earning 2.75% in 18 months that will have earned me £336.50 meaning that the total cost of the 18 month loan was -£96.50. (I could do much better if I put it in a higher return account obviously)

On top of that as I still have that £8,000 available to spend when I add my monthly saving to it I will have enough money in about 6 months to buy another rental property, at that point I will not be able to pay off the CC though so I will just do another balance transfer to another 0% card.

The point being is that my debt is actually making me money. If I paid off the debt right now then I would not be able to afford to buy a rental property in 6 months so I lose a potential £300 pcm profit.

 

[edro]

I disagree with this. People ruled by logic will game the system to their advantage.

Take the following scenario that I am currently moving through.

I get a CC with 0% on balance transfers for 18 months and transfer ~ £8,000 to it. The cost to transfer this money was £240 but as I live within my means I have that money sitting in a liquid savings account earning 2.75% in 18 months that will have earned me £336.50 meaning that the total cost of the 18 month loan was -£96.50. (I could do much better if I put it in a higher return account obviously)

On top of that as I still have that £8,000 available to spend when I add my monthly saving to it I will have enough money in about 6 months to buy another rental property, at that point I will not be able to pay off the CC though so I will just do another balance transfer to another 0% card.

The point being is that my debt is actually making me money. If I paid off the debt right now then I would not be able to afford to buy a rental property in 6 months so I lose a potential £300 pcm profit.

wat?

That is a risky game just for £96 over 18 months.
How does making £96 in interest enable you to own another rental property?

 

[Timorous]

wat?

That is a risky game just for £96 over 18 months.
How does making £96 in interest enable you to own another rental property?

It is only risky if you spend more than you can afford and in that case I agree you should not have a credit card for anything other than emergencies.

The interest does not help me buy a house, I was illustrating that it is possible to have debt and make more money vs not having debt and pointing out that someone with a logical mind would min/max the system to get the maximum benefits from it. £96 might not be a lot of money but it is better than £0 and it is a lot better than paying interest.

What does help me buy the house though is the capital I still have. I could pay off the debt and lose that capital or I could add to it with other savings and buy an asset that would cover the interest cost of the credit card in the instance that I can not shift the debt to another 0% deal again. By not paying off the debt but using the capital I come out ahead compared to paying off the debt.

This cannot go on for ever though but it both gives me time and helps me be in a stronger financial position when I decide to pay off the debt. There is also a ceiling point where it stops you from getting mortgages but that depends on the amount of income you have so if you use the debt to increase earnings you can stretch it pretty far.

:This bit is a bit off topic but it illustrates a point about debt vs no debt and how debt can be used to your advantage if you manage it properly:

If I had £1,000,000 I could buy 10 £100,000 houses to rent out. I could earn around £600pcm/house so I would have a profit of £6,000 pcm and no debt.

I could also buy 40 houses with 25% deposits. The interest would be around £375pcm @5.99% (quite high even for a buy to let) per house.

Total interest = £15,000pcm
Total income = £24,000pcm
Total profit = £9,000pcm and debt

By being in debt I am better off by £3,000 a month which is a lot more than the debt free route. This is very simplistic but I used a high interest rate so it is around the ball park. The other advantage is that my risk is spread out among more properties so losing a tenant has less impact in the second scenario than the first.

 

[jupiter57]

Meh, just get the "ATOT Visa" card.
From what I gather from all the basement dwellers here, they give you $2 for every dollar you spend with it. (I believe this is how they all make $250K yr. while still in High School/College)
Just pay off all 3 cards, they give you $6200 back, you're golden! $3100 to use for a new Video Card.

Seriously, ATOT is the LAST place I would ask for any financial advice.

 

[TechBoyJK]

Meh, just get the "ATOT Visa" card.
From what I gather from all the basement dwellers here, they give you $2 for every dollar you spend with it. (I believe this is how they all make $250K yr. while still in High School/College)
Just pay off all 3 cards, they give you $6200 back, you're golden! $3100 to use for a new Video Card.

Seriously, ATOT is the LAST place I would ask for any financial advice.

Honestly, I think a pretty good discussion stemmed from the post.

 

[MrDudeMan]

Meh, just get the "ATOT Visa" card.
From what I gather from all the basement dwellers here, they give you $2 for every dollar you spend with it. (I believe this is how they all make $250K yr. while still in High School/College)
Just pay off all 3 cards, they give you $6200 back, you're golden! $3100 to use for a new Video Card.

Seriously, ATOT is the LAST place I would ask for any financial advice.

There's no reason to avoid a forum like this. If you can't sort out the bad advice from the good advice, that's your problem.