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Advice please...have money to pay down debt, want to use it intelligently

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dhb1313
Member

Advice please...have money to pay down debt, want to use it intelligently

Hello all:

 

I'm in trouble. I have $52K of credit card debt. Yup, you read that right.  My overall utilization is (brace yourself) 78%.  Not Good, obviously.  Here's some good news: I will shortly have $23K available to pay down this debt, and I'm trying to figure out the best way to allocate it....See more details, below.

 

1)  Should I spread available funds across all cards, to try to prevent rate jacking and creditors lowering my CL?  Or focus on getting utilization down to 10% or less for just 2 cards, so some of the good counterbalances the bad on my credit report?

 

2) When paying down debt to a single creditor, do several smaller payments do more to restore my credibility than one lump sum payment, which presumably looks like a balance transfer?

3) When my dog was diagnosed with cancer, I made the mistake of asking Wells Fargo for a CL increase, and was assured that they would not pull my credit report.  They did pull my report and denied the increase...then and a few weeks later BofA lowered my credit limit to the existing balance....after I had just paid them a hefty sum  and gotten that card down to 85% util.  Is there any way to protect myself from more hits like that, other than always paying on time and reducing my overall utilization as fast as possible? 

 

Creditor / Credit Limit / Current Utilization / Interest Rate

 

Discover #1 / $10,500 / 93% / Had been 2%, about to jump to 16%

Discover #2 / $10,200 / 92% / 16%

BofA / $8,400 / 95% / 12%

Wells Fargo / $13,000 / 82% / 11%

LLBean / $15,000 / 79% / Had been 0%, about to jump to 20%

Chase / $9,000 / 27% / 9%

Catherine's / $750 / 0%  / 25%

JC Penney / $224 / 0% / dunno

 

Total CL $67,074  and 78% utilization overall

 

Your guidance is most appreciated!

Message 1 of 17
16 REPLIES 16
jamesdwi
Valued Contributor

Re: Advice please...have money to pay down debt, want to use it intelligently


@dhb1313 wrote:

Hello all:

 

I'm in trouble. I have $52K of credit card debt. Yup, you read that right.  My overall utilization is (brace yourself) 78%.  Not Good, obviously.  Here's some good news: I will shortly have $23K available to pay down this debt, and I'm trying to figure out the best way to allocate it....See more details, below.

 

1)  Should I spread available funds across all cards, to try to prevent rate jacking and creditors lowering my CL?  Or focus on getting utilization down to 10% or less for just 2 cards, so some of the good counterbalances the bad on my credit report?

 

2) When paying down debt to a single creditor, do several smaller payments do more to restore my credibility than one lump sum payment, which presumably looks like a balance transfer?

3) When my dog was diagnosed with cancer, I made the mistake of asking Wells Fargo for a CL increase, and was assured that they would not pull my credit report.  They did pull my report and denied the increase...then and a few weeks later BofA lowered my credit limit to the existing balance....after I had just paid them a hefty sum  and gotten that card down to 85% util.  Is there any way to protect myself from more hits like that, other than always paying on time and reducing my overall utilization as fast as possible? 

 

Creditor / Credit Limit / Current Utilization / Interest Rate

 

Discover #1 / $10,500 / 93% / Had been 2%, about to jump to 16%

Discover #2 / $10,200 / 92% / 16%

BofA / $8,400 / 95% / 12%

Wells Fargo / $13,000 / 82% / 11%

LLBean / $15,000 / 79% / Had been 0%, about to jump to 20%

Chase / $9,000 / 27% / 9%

Catherine's / $750 / 0%  / 25%

JC Penney / $224 / 0% / dunno

 

Total CL $67,074  and 78% utilization overall

 

Your guidance is most appreciated!


pay down each of the cards with high balance 2500, that should get your UTL of each card under 80%, watch how the lenders respond, and use the rest accordingly, perhaps see if you have enough to pay of the smallest one with the remaining... Don't request any CLI's or apply for any newcards, you don't want to spook the existing lenders, just keep payiing down unless you get your UTL to 30% of less. 

 

 

 

 

Cards: Chase Southwest 20k & CSR 17k & CSP 10k & FNBO 30k Oregon Duck 5k, & AMEX BCP 32.5k & Amex Magnet 15k&amg; Hilton Surpass 7.5k & Delta Gold 12k & Zync NPSL, Fidelity AMEX 17k Commerce5.9k & Cash Forward 7.5k & Sams Club MC 20k, Paypal Extras MC 10k, Paypal Credit 7.25k CapOne Venture 15k, QS 2.5k, QS 750, Amazon 10k, Walmart 10k, Citi Simplicity 18k, Discover IT 23k and a nice stack of store cards.
Landmarkcu Personal Loan 10k
Message 2 of 17
yfan
Valued Contributor

Re: Advice please...have money to pay down debt, want to use it intelligently

First, a question back to you: After you use the $23K, will you still have enough money coming in every month to pay the minimum payments on all cards?

 

IF NO, then pay only the minimum for as long as is necessary, and don't rack up any more debt.

 

IF YES, then after you have paid the minimum for a given month on all your cards, first pay off your highest interest card (in your case, that would be Catherine's). Pay it off completely. Then move to the next highest interest rate card and repeat until the 23K runs out.

Message 3 of 17
SunriseEarth
Moderator Emeritus

Re: Advice please...have money to pay down debt, want to use it intelligently

It sounds like BoA is balance chasing you.   I'm not sure if you can prevent them from doing it further if you pay them.  What's done is done.

 

I honestly think that trying to optimize scoring right now should not be a priority.  With that UTIL, you'll be hard-pressed to get new credit, anyway.   I think you should consider the option that will get you out of debt the fastest.   That would be to pay off the balances with the highest APR.   That appears to be LL Bean and then the two Discovers. I'd probably PIF on the LL Bean and split the remainder on the two Discovers.   And then, start paying as much as you can on what's left.   



Start: 619 (TU08, 9/2013) | Current: 809 (TU08, 3/05/24)
BofA CCR WMC $75000 | AMEX Cash Magnet $64000 | Discover IT $46000 | Disney Premier VS $43600 | Venmo VS $30000 | NFCU More Rewards AMEX $25000 | Macy's AMEX $25000 Store $25000 | Cash+ VS $25000 | Altitude Go VS $25000 | Synchrony Premier $24,200 | Sony Card VS $23750 | GS Apple Card WEMC $22000 | WF Active Cash VS $18,000 | Jared Gold Card $16000 | FNBO Evergreen VS $15000 | Citi Custom Cash MC $14600 | Target MC $14500 | BMO Harris Cash Back MC $14000 | Amazon VS $12000 | Freedom Flex WEMC $10000 | Belk MC $10000 | Wayfair MC $4500 ~~
Message 4 of 17
JenniferinFL
Frequent Contributor

Re: Advice please...have money to pay down debt, want to use it intelligently

You are probably going to get balance chased a bit. It's not the end of the world, when it's all paid back down for a few months you can always hit the CLI button again. That BOA card may balance chase you quite a way down. I would actually pay it off last for that reason.

 

I would probably be tempted to pay off LL Bean and Chase and then stick those in the sock drawer for awhile. Then I would probably take whatever was left and split it between the two Discover cards to hopefully get them both below 90%.

 

 

 

 

 

 

Current Cards: Cap 1 Journey $3000, Cap 1 Playstation $2250, WFNNB Store Cards $2450 combined, Target $700, CareCredit $1700, Barclay Rewards Plat. Mastercard $1800, Old Navy $300, DCU Platinum Rewards Visa $2000, Swagbucks Rewards Visa $1000

Starting Score: 615 EQ (03-15-2012) 600 TU (03-21-2012 Barclays app) ) Ch.7 discharged 5/2009

Current Score: 671 EQ (09-27-2014 DCU) 660 TU (9/26/14 Barclays) Ex 688 (10/07/2014 Swagbucks)

Gardening since 9/22/2014


Message 5 of 17
Anonymous
Not applicable

Re: Advice please...have money to pay down debt, want to use it intelligently


@yfan wrote:

First, a question back to you: After you use the $23K, will you still have enough money coming in every month to pay the minimum payments on all cards?

 

IF NO, then pay only the minimum for as long as is necessary, and don't rack up any more debt.

 

IF YES, then after you have paid the minimum for a given month on all your cards, first pay off your highest interest card (in your case, that would be Catherine's). Pay it off completely. Then move to the next highest interest rate card and repeat until the 23K runs out.


I was actually thinking this exact same thing. If cash flow is going to be an issue after you use up the $23k, I would do as yfan suggests and use the $23k to pay the minimum (or maybe a little bit more than the minimum) and use that to sustain your payments for as long as you can.

 

Besides, I'm not sure that spending the entire $23k at once to pay all cards across the board, or paying 1-2 off will have a significant impact on your score. It'll drop once you get the overall util down to a reasonable amount.

Message 6 of 17
bigblue7722
Valued Contributor

Re: Advice please...have money to pay down debt, want to use it intelligently

I would pay the catherines, JCP, and LL bean off in full. Then take whats rest and make double the min payments till your money runs out. Next step would be do you own your own car? If so what do you think its worth? I would look into a local credit union to see if you can do a loan against the car which could save you a lot of money in interest. Same thing do you have any equity in your house. I would look to do a home equity loan to pay off the rest. It is always a good idea to change credit card debt to installment loan debt. 

AMEX PRG NPSL,Lowes $17000,Capital One venture card $12,000,Us Airways mastercard $9500,Fidelity Amex $9000, Discover it $8000, Capital One Venture One $7500, BOA 123 rewards $7500 CSP $6000, Capital One Quicksliver $5500, Amazon Store card$5000,Barclay
Card Ring $5000 Chase Marriott $5000,Chase Hyatt $5000, Sallie Mae Mastercard $4400, Paypal smart connect $4000,Chase Freedom $3200, Capital one Quicksliver visa $3000, Chase IHG Rewards $2300, Chase Southwest Premier $2000, Citi Double Cash $1500, AMEX BCE $1000

Last app July 22nd 2015- No apps for two years.
Message 7 of 17
dhb1313
Member

Re BofA balance chasing me

Thank you EVERYONE - I'm really impressed with the replies I'm seeing here.  

 

Sunrise, JenniferinFL, others too:  Could you please say more about your recommendations for a creditor that is "balance chasing" me?  (I'm understanding that as a creditor reducing my CL to the amount owed, continuously, while I'm paying it off...is that correct?)  I was sufficiently irked that I also thought of paying them last, but it occured to me that until my situation is under much better control, I want to receive balance transfer offers...the debt load is terrible, and my best chance of paying it off faster hinges upon reasonable interest rates...which is why i care about my fico score at all.

 

So...does that mean that I should pay BofA off sooner rather than later, so that they don't keep hurting my score?  I've noticed copycat behavior before between creditors, so want to try to counteract this if possible.  If they all did this, I'd be in even worse trouble...


Again, thank you for considering my situation.

Message 8 of 17
SunriseEarth
Moderator Emeritus

Re: Re BofA balance chasing me


@dhb1313 wrote:

Thank you EVERYONE - I'm really impressed with the replies I'm seeing here.  

 

Sunrise, JenniferinFL, others too:  Could you please say more about your recommendations for a creditor that is "balance chasing" me?  (I'm understanding that as a creditor reducing my CL to the amount owed, continuously, while I'm paying it off...is that correct?)  I was sufficiently irked that I also thought of paying them last, but it occured to me that until my situation is under much better control, I want to receive balance transfer offers...the debt load is terrible, and my best chance of paying it off faster hinges upon reasonable interest rates...which is why i care about my fico score at all.

 

So...does that mean that I should pay BofA off sooner rather than later, so that they don't keep hurting my score?  I've noticed copycat behavior before between creditors, so want to try to counteract this if possible.  If they all did this, I'd be in even worse trouble...


Again, thank you for considering my situation.


Your definition is correct.   The lender does this because they see you ask a risk and don't want you to charge any more on this CC.   BoA will likely keep lowering the CL as you pay them and could possibly close the account.   I don't think paying them off sooner would stop them from balance chasing, so I actually wouldn't recommend prioritizing them using your payoff amount.  

 

I still think the best way to get yourself out of debt is to pay off the highest interest amounts first.  



Start: 619 (TU08, 9/2013) | Current: 809 (TU08, 3/05/24)
BofA CCR WMC $75000 | AMEX Cash Magnet $64000 | Discover IT $46000 | Disney Premier VS $43600 | Venmo VS $30000 | NFCU More Rewards AMEX $25000 | Macy's AMEX $25000 Store $25000 | Cash+ VS $25000 | Altitude Go VS $25000 | Synchrony Premier $24,200 | Sony Card VS $23750 | GS Apple Card WEMC $22000 | WF Active Cash VS $18,000 | Jared Gold Card $16000 | FNBO Evergreen VS $15000 | Citi Custom Cash MC $14600 | Target MC $14500 | BMO Harris Cash Back MC $14000 | Amazon VS $12000 | Freedom Flex WEMC $10000 | Belk MC $10000 | Wayfair MC $4500 ~~
Message 9 of 17
dhb1313
Member

Re: Re BofA balance chasing me

If BofA closes the account would the full amount be due?  If I don' t use this money to pay them off, I won't have any way to pay them the full amount.  Surely if I paid off the full amount owed, they wouldn't then close the account?  Or might they?

 

Message 10 of 17
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