$10,000 in cc debt, where to start? Planning for car loan.

[fury1995]

I agree with tackling the highest balances first. Then go after high APR cards and cards with annual fees.

You are not seeking credit right now, you are seeking relief...

I agree with closing your Open Sky and getting your deposit back. You can put this toward your other debts. This card will continue to age and not affect your AAoA and it's not really helping/damaging your utilization. Do not close anything without annual fees.

I sense you use your Walmart card to cover monthly household expenses (food, toiletries, clothing), correct?

If that's the case, that's where your oppourtunity to tighten the belt comes from. Change this, you will change everything.

[NRB525]

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@Anonymous wrote:

2) Assuming that the APRs are equal, you want to pay off the highest dollars while paying off cards completely. This means that it is better to pay off one $2500 card than two $1000 cards, with the third thousand going to the big card, but paying off three $1000 cards and putting nothing to the $2500 card is even better.
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OP already plans to pay off the highest APR first, that gets that out of the way.

The remainder of the cards can be expected to have roughly the same APR, Ring excluded.

The score bump will happen at 50% utilization on one card. In June, when all of my individual cards went below 50%, none remained over 50%, I got a big score run up. As some go above and then back below 50% recently, it's about a 7 point swing depending on crossing that 50%. So it does make a difference for score, less difference for APR cost, by keeping cards below 50% when 30% is not within reach.

[Creditdreamer]

I agree with what PP said about getting on a written budget and using a spreadsheet or something.

Once you have a plan, you can decide how long in total you think it'll take to pay off the cards. If you're going to be able to pay them off fairly quickly, the interest is really not much money in the long term. The goal should be paying them off as quickly as possible, not moving a bunch of stuff around to get the lowest apr. I get that that makes sense financially, but the mindset is the biggest thing. I have followed the debt snowball method (Dave Ramsey). Basically you pay off the smallest balances first to get the ball rolling and avoid having to make so many payments every month. Example: you pay off one card that had a $30 minimum payment. Then because that card is paid off, you take that $30 and throw it toward the next lowest debt. In with all of these, get any extra money you can from any extra work you can find. The mindset of needing to get stuff paid off, rather than moving the balances around, will be the best thing possible.

So I would start paying off the cards as much as you can before your tax refund comes (I'm assuming April?).

1.  OpenSky - $200

5.  Chase Freedom - $500

6.  Capital One Platinum - $500

7.  Capital One Playstation - $500

9.  Capital One Quicksilver - $2,300

Not maxed, but using:

3.  Amazon - $300/$400

8.  Barclay Ring - $800/$1,000

2.  Fingerhut - $236/$2,500

10.  Walmart - $4,500/$5,000

4.  Lowe's - $360/$12,000

The big thing though is that if you pay these things off, you can't charge them up again. That is the point of getting on a written budget (or using a spreadsheet or budget program like YNAB). I have done it before where I "pay all my cards off" and then end up just charging them back up again because I didn't actually have the money to be paying them off, it should have gone to other things.

Something I have done to try to avoid interest that can work if you're disciplined enough is figure out how much you can put on credit cards (groceries etc) for the month. Then you pay off the amount on a cc that you would use for groceries. Then you use the CC for groceries for the rest of the month. Because you'd then be "paying the balance" or some of the balance at least of the cc, you'd then be able to lower your interest liability for that month. Example: I have a CC with $500 on it of a $1000 limit. I know I'm going to spend $400 on groceries for the month. So I take that $400 and pay the credit card down to $100 and then know that I only have $400 to spend on groceries. But then at least I'm avoiding the interest on that extra $400 because I paid it down temporarily.

But the most important part about all of this is to get on a written budget, especially with an income of only 25,000 and owning a house.

[happypill]

Given your income and debt levels, your primary goal should be to pay down your balances.  I hate to say it, but you're in a position where one unlucky event (medical expense, car repair, losing your income even for a month) could send into an unrecoverable tailspin so the last thing you should be thinking about is your scores and a car loan.  Your util is so high right now, especially compared with your income that lenders might reasonably start taking AA and balance chasing, further exacerbating your situation.

If you have $6k available right now, you should completely pay off whatever low limit cards you can immediately.  That will give you some breathing room because you'll have fewer payments to make each month.  Then reduce the balances on your other cards below 50% to the extent possible.  That will improve  your profile and hopefully save you from AA.  Then going forward, direct your payments to the cards with highest interest rates.  Above all, stop spending and figure out what your budget is.

[Anonymous]

Good advice.  I'm echoing some others, but my thoughts: 

1.  Utilization is secondary to saving money.  You save money by paying less in interest.  This should be goal one.  All other goals are secondary to you "saving" money by paying down interest. 

2.  Your auto loan "need" is secondary to paying down interest.  Your auto loan will likely have a much lower rate than your credit card interest.  Also you don't need to add debt anytime soon.  If you must take out an auto loan shortly it should be for an affordable used car in your price range and low as possible while you are in this pickle.  

3.  Create a plan to avoid this in the future.  You said you don't know how this happened, but you really do.  Do NOT become a slave for your credit card people.  Don't pay 750 for a 500 dollar couch because of interest.  Stop giving companies extra money.  You know this is an awful practice and you don't want this to continue to drag you down.  Learn from the mistake and learn how to avoid it in the future. 

We're all rooting for you in here my man, let's get out of this debt burden and use credit to our advantage, not make it cost us a ton of hard earned money!

[Anonymous]

You can do it! The first step is knowing you need a (edited for spelling. arrgh) plan and the second step is making a plan. Then stick to the plan and you will chip away at the debt. Lots of good advice here.

When I filed for Chapter 13 I had a budget so tight I knew how much I could spend for everything. It saved my life. You need a budget you can follow. Perhaps a change in the way of thinking about your credit cards will help, too. Keep one for emergencies that you can't predict then pay pay pay. Good luck to you!

[Anonymous]

Every single credit card no matter the balance has a $25 minimum payment. if you pay off 5 cards that is $125 in your monthly budget I would snowball the heck out of the easy ones, apply extra money at the retail cards, as those are the ones costing you.

[Anonymous]

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@Anonymous wrote:
Every single credit card no matter the balance has a $25 minimum payment. if you pay off 5 cards that is $125 in your monthly budget I would snowball the heck out of the easy ones, apply extra money at the retail cards, as those are the ones costing you.

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that's not quite right. for Amex, it's 1% of balance + any interest accrued with a minimum of 35. almost all other cards are interest+x% of balance. i pay $119 every month for chase on a card with a $5000 balance, so minimum payments do vary greatly. (also I drive a dodge  )

[fury1995]

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@NRB525 wrote:

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@Anonymous wrote:

2) Assuming that the APRs are equal, you want to pay off the highest dollars while paying off cards completely. This means that it is better to pay off one $2500 card than two $1000 cards, with the third thousand going to the big card, but paying off three $1000 cards and putting nothing to the $2500 card is even better.
.

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OP already plans to pay off the highest APR first, that gets that out of the way.

The remainder of the cards can be expected to have roughly the same APR, Ring excluded.

The score bump will happen at 50% utilization on one card. In June, when all of my individual cards went below 50%, none remained over 50%, I got a big score run up. As some go above and then back below 50% recently, it's about a 7 point swing depending on crossing that 50%. So it does make a difference for score, less difference for APR cost, by keeping cards below 50% when 30% is not within reach.

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The OP is seeking relief from their debt, not new credit.

I would agree with you if the goal was to apply for something like a house or car but in this situation increasing their scores have no bearing on what they are attempting to do.

[CMoore515]

If it were me, I'd pay off the smallest card first, just so you see some progress, regardless of intrest rate. Then snowball the rest of them once the first card is out of the way. As others have said, DO NOT charge anything else after you've paid them off. Just my opinion.