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

[Chiropteran]

I can't fathom people with voluntary cc debt.

It's really not that hard to fathom. You need a better imagination.

 

[TechBoyJK]

Pre spending money you don't have in hand is what I am talking about.

Guitar center and BB are not essential spending, yet you owe them 2300 bux.

I agree. The only reason I did those two was to essentially finish a music studio project I had. It's been a lot of fun and totally worth the investment. Granted, going into it, I figured I'd be able to pay them off a bit quicker, but here I am, about to pay one off fully.

 

[edro]

Pay off Best Buy. I guarantee it is the highest rate.

Don't leave a few dollars on the account. That is retarded.

Your credit score is slightly affected by whether or not your account is open and in good standing, not whether or not you have a $100 balance.
They won't close your account unless you have multiple years of inactivity.

 

[edro]

And a reminder for everyone on those 0% loans: IIRC, some of them charge retro-active interest if they are not paid on time, especially the store cards.

They all do, and if the buyer doesn't know this, they deserve the huge bill at the end for back interest.

Nobody loans money for free.

 

[JTsyo]

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.

It's a good life experience to have under your belt. At least it was a manageable amount. Hopefully if the situation arises again you'll have some savings to fall back on instead of debt.

 

[ViviTheMage]

heh, you're lucky. i'm down to my last three cards too, 9k tot. i have 13k in emergency savings, that's it. i'm wondering if i should just pay it all off, have 4k left, 0 debt, and start over. or just keep straggling along for a year trying to pay it off? my problem is when i have debt i keep piling it on. just dropped $400 on cut co knives from a sales rep yesterday. i should break this down and just create two new threads. fml

card1 - $600
card2 - $3500
card3 - $4900

pay it all off with your emergency funds....no point in having it sit there, when you are accruing the dreaded interest charges.

 

[Aikouka]

Don't leave a few dollars on the account. That is retarded.

Your credit score is slightly affected by whether or not your account is open and in good standing, not whether or not you have a $100 balance.

I never said to leave the money on the account. The point is to get a balance reported to the credit agencies to adjust your FICO. Reported doesn't mean the balance is actually revolving (accruing interest).

 

[TechBoyJK]

I never said to leave the money on the account. The point is to get a balance reported to the credit agencies to adjust your FICO. Reported doesn't mean the balance is actually revolving (accruing interest).

So, I'm gathering that the best idea for Credit Score would be to pay down the cards to $0, but don't close them right away, and if possible, keep that balance at $0 for long enough that the creditor closes the account?

 

[mmntech]

Highest interest first. If it's all about the same, pay the one with the most on it. So BB card makes the most sense. Over the next couple of months, curb your spending and focus on paying off the other two cards in full. Fortunately you're not too deep in the hole. I'm a big believer in not using a credit card unless I know I'll have the cash to back it up in full at the end of the month. Of course shit does happen but owing, especially on a CC, is a bad place to be and should be avoided at all costs.

 

[z1ggy]

If all the rates are roughly the same.. Then pay the one with the highest principal on it...How is this even a real question?

 

[jlee]

+1 to (almost) everyone else - highest interest first.

If all the rates are roughly the same.. Then pay the one with the highest principal on it...How is this even a real question?

If the rates were the same, I'd knock out the smaller ones first just to get rid of them.

 

[HardcoreRobot]

pay it all off with your emergency funds....no point in having it sit there, when you are accruing the dreaded interest charges.

agree. worst case, if emergency does show up, just go back into debt. the only difference is you wont be paying interest unnecessarily right now.

to the OP, you left off the most important detail - interest rate. thats the only thing that matters. pay of the debt that is mostly costly. the bs about paying off a card only works for super financially illiterate. the mental victory of paying off a card is not worth more than the actual financial savings of paying down the most costly debt.

 

[TechBoyJK]

Highest interest first. If it's all about the same, pay the one with the most on it. So BB card makes the most sense. Over the next couple of months, curb your spending and focus on paying off the other two cards in full. Fortunately you're not too deep in the hole. I'm a big believer in not using a credit card unless I know I'll have the cash to back it up in full at the end of the month. Of course shit does happen but owing, especially on a CC, is a bad place to be and should be avoided at all costs.

I'm most likely going to pay off most if not all of the Best Buy card. Yep, I don't really feel like I'm all that far in debt.. I think $50k is a lot, and granted my income is slim right now, but it's picking up and I have experienced several good years where in that time, I could damn near pay off all my debt in one or 2 paychecks.

However, I don't want to take the 'spare cash' I have now for granted, and I'm usually happier when I'm broke but debt free. So even if I have to scrape by for a few months, if I know I'm spending my money responsibily, I'm perfectly content hanging out at home watching movies and playing games. It's only temporary anyway. I don't plan on opening up any more credit cards and I'm much more fiscally disciplined than I was a few years ago before things got tight.

 

[TechBoyJK]

agree. worst case, if emergency does show up, just go back into debt. the only difference is you wont be paying interest unnecessarily right now.

I agree too. Also, he said he tends to rack up debt when he's in debt, so if he paid it all off with his savings, he'd be debt free, and his savings would be low. Once he got out of debt, he want to stay that way, and having a low savings reserve would push him to want to spend that extra cash building it back up.

 

[mvbighead]

Yep, your debt here is nothing. Just pay the highest interest rate first.

I could agree without knocking out lower principle amounts first if you had more debt, just to give you a good feeling about knocking stuff out, but you should be able to knock yours out in no time at all. Also, when one payment is gone (IE the balance is paid off), there is that much more money to go against those that remain.

 

[amdhunter]

I'd ask for an increase and then go shopping for new stuff.

 

[Schfifty Five]

So, I'm gathering that the best idea for Credit Score would be to pay down the cards to $0, but don't close them right away, and if possible, keep that balance at $0 for long enough that the creditor closes the account?

Just don't close any of them, period. Pay them down, keep $0 balance, throw the cards into a drawer and forget about them. The longer you have those accounts open, the better it helps your score.

 

[Aikouka]

Just don't close any of them, period. Pay them down, keep $0 balance, throw the cards into a drawer and forget about them. The longer you have those accounts open, the better it helps your score.

The only reason I would consider closing a card is if it has any sort of fees associated with it.

I would probably avoid purposefully ignoring a card just to have it get closed due to inactivity. If he goes to Guitar Center just for some menial items once a year, that's more than enough to keep the card alive and he could easily pay that off once the bill comes. You can really do that for any card, and you'd especially want to consider it if the card has rewards.

I'm up to about $100 on my Chase Freedom card after cashing out my rewards a couple months ago. I haven't paid any interest on that card, which means it's free money for me!

 

[OOBradm]

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

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

 

[ussfletcher]

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

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

Or pay the least amount of money by paying off the higher interest first.

 

[hans007]

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

 

[Agman]

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.

 

[Aikouka]

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

A card may promise 0% interest for 6-18 months (typically 12), but I've never seen no fee cash advances. Are they really that common or are you suggesting to just eat the cash advance fee?

 

[Pulsar]

I do know that paying off these cards and closing them off may actually negatively affect my credit just as much as it helps.

Boy, do the credit cards have the US population completely suckered. Pay off your card and close it? CREDIT HIT! Too few credit cards? CREDIT HIT! Too many inquiries? CREDIT HIT!

Carry 1 card for emergencies. Pay cash or write a check. Fuck the credit companies, screw the reporting agencies, and worry about how to keep YOUR money in your pocket. If you can't pay cash for something then don't buy it.

This isn't aimed at you TechBoy - just the total assholes as the credit unions and banks who worry about how to sucker people on a daily basis.

My credit 'score' is just under 800, and I've never carried more than 1 card.

Rant's over.

Pay off the Best Buy credit card and close the account so you won't be tempted to respend.

 

[Pulsar]

A card may promise 0% interest for 6-18 months (typically 12), but I've never seen no fee cash advances. Are they really that common or are you suggesting to just eat the cash advance fee?

My credit card, through my credit union, is a no-fee cash advance. Locked rate at 9.99%, platinum visa, no yearly fee. A cash advance is looked upon as merely another charge, and I can make the transfers just by logging into my credit union website and transferring cash over. I've had to do this once or twice when my company was late issuing paychecks =/.