Advice on Paying off Credit Cards

[yofico]

Here is the damage:

Capital One (22%) 2999/3000

Discover IT (19%) 1745/1750

BankAmeriCard Visa (14.24%) 2984/3000

AMEX Blue Cash Everyday (13%) 2999/3000

I have 1500 each month to put towards my credit card debt. My only problem is I keep putting travel expenses on them and my job takes 1.5 months to reimburse me which sucks. I really should be paying cash, but I'm in a tough situation. 

Goals: Pay off debt ASAP! My credit score is 646 (definitely because these cards are maxed out!); however, I am not looking to buy a car, house, etc. any time soon!! I only plan to move out my apartment in 6 months and hope to have ths debt gone by then. So credit score will bounce back after this debt is gone.

How should I approach this debt?

1. Pay minimum on Discover, Amex, and Visa and put what's rest of the 1500 towards the Capital one (22%)?

2. Spread out my 1500 evenly to chop the UTI down?

3. Send my cards to my parents to fight temptation and use debit card/cash for travel only?

Thanks in advance for the advice.

[StriveToProsper]

Personally, I'd pay down the Capital One and Discover ASAP because of their higher interest rates. Then split the two evenly till paid off. For the time being, treat the credit cards like debit cards and use only what you can PIF per month. Also use the card where you gain the most benefits.

[parakleet]

I would pay 2x the minimum on Discover, BoA, and Amex and put the rest on capital one. If you want to save money on interest, I'd start from the highest interest rate and go from there. However, there are those who advocate the "snowball" method, where you'd start with the lowest balance, thereby giving you a certain psychological satisfaction in paying off a CC. If you went that route, you could do 2x minimum on the others while putting the rest on paying off Discover, your lowest balance. Personally, I'd go the route of saving the most money on interest but I can understand why the "snowball" method would work for those with cards with many balances. 

[user5387]

Welcome to the forums!

Have you considered a consolidation loan from a local CU or Lending Club?

[Involver]

For one, I would stop putting expenses on the cards yesterday

For scoring:

I would pay the Discover to below 80% to get it out of being maxed-out and split the rest. After that I would pay the minimum on Discover and split the rest between the other 3 to get them below 80%. Then pay off Discover and progressively pay the others off.

To save money:
Pay the highest interest cards down first, then apply those payments to the next highest, etc...

Careful with making drastic payments if you've been carrying maxed out balances for a while, you could be balance-chased or other AA.

[yofico]

Thanks for the advice! 

[yofico]

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@user5387 wrote:

Welcome to the forums!

Have you considered a consolidation loan from a local CU or Lending Club?

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Would I qualify for a consolidation loan with a credit score of 646? I never thought about those options. Do they give me a check and I pay off all the credit cards and then pay monthly on the loan?

[chrisw1968uk]

So you are $23 away from maxing out 4 cards? - I would personally pay 30% of your available funds to the highest rate cards and the other 2 cards get 20% each, SD the cards until they are carrying low balances - i'm wondering if the banks may balance chase you though - good luck  

[user5387]

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@yofico wrote:

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@user5387 wrote:

Welcome to the forums!

Have you considered a consolidation loan from a local CU or Lending Club?

---

Would I qualify for a consolidation loan with a credit score of 646? I never thought about those options. Do they give me a check and I pay off all the credit cards and then pay monthly on the loan?

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Yes, you would move revolving debt (CCs) to installment debt (consolidation loan).  You'd receive a check, and then be obligated to pay $X a month for Y months.

These two kinds of debt are scored differently, and I expect you'd see a significant score boost as a result.

You could try some local CUs and see what they say, or try Lending Club.

[yofico]

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@Involver wrote:
For one, I would stop putting expenses on the cards yesterday

For scoring:

I would pay the Discover to below 80% to get it out of being maxed-out and split the rest. After that I would pay the minimum on Discover and split the rest between the other 3 to get them below 80%. Then pay off Discover and progressively pay the others off.

To save money:
Pay the highest interest cards down first, then apply those payments to the next highest, etc...

Careful with making drastic payments if you've been carrying maxed out balances for a while, you could be balance-chased or other AA.

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Thanks for the response. I like the saving money option. I have paid off the discover twice in the past 4 months (1500/month towards CC). I just keep putting stuff back on it for work/conferences. I am waiting for 1500 in the mail to pay it off again. Since paying them off, I  have not touched my credit line, but I am scared that AMEX would chase my balance. To be honest, I don't care. I want to get rid of this debt once and for all.