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Hello,
I have read these forums and value your advise and now I need help!
I am 21 years old and when in college I racked up a lot of credit card debt. I'll start from the beginning. When I was 18 I had it in my head that I was going to have good credit. My first credit card was a Discover More card which I got when I was 18 and have always kept the account in good standing. I usually always paid off the balance each month and when I did carry a balance, I made large payments to quickly pay it off. In my second year of college, I applied and was approved for several other credit cards and now they are all pretty much at their limit. Below is my current credit snapshot:
CARD NAME CURRENT BALANCE CREDIT LIMIT INTEREST RATE
DISCOVER MORE 3900 4000 19.99
CITI 3500 3600 14.25
CAPITAL ONE 1450 1500 21.99
DIRECT REWARDS DISC 290 300 18.00
KOHLS 250 1000 21.90
KAY JEWELERS 160 800 23.90
CHASE 2450 2500 10.00 (CLOSED THIS ACCOUNT TO GET LOW INT. RATE)
BEST BUY MC 1100 1200 19.99
MACYS 0 100 23.90
WELLS FARGO 250 300 17.99
US BANK 450 500 21.90
I make $50,000 per year and I am trying to find a loan to pay all of these credit cards off to make ONE payment instead of making $100 here and $400 there. I have about $1200 per month that I am able to apply towards this credit card debt. I have tried to apply for a loan with my bank (Wells Fargo) and they denied me saying that there was no way for them to know that I wouldn't rack up the CL again. (not that I blame them)
So what I am asking for here is to see if there is anyone who can look at my situation and A.) tell me if there is a bank out there who would do this and/or B.) how I should go about paying this down. I have sat down and created a spreadsheet showing what I need to pay to each card each month to be debt free in one year and when I look at it in Excel, it seems easy enough to do, but I am finding that it is more difficult than I thought.
I have never been late on any payments on any card but my credit report does show me being over on my limit with a few of these cards. Any help would be greatly appreciated!
Thank you!
From what I have learned, and to be simple... Pay the minimum payment on each card and what you have left over, apply it to the HIGHEST interest rate card first. Once paid off, just repeat the process.
$1200 per month would easily pay off your smaller cards, which would be a great start! it's pretty encouraging to see those zero balances. then hide your cards if you don't think you can resist spending. give them to your parents. put them in a safety deposit box. something out of sight!
@laz98 wrote:$1200 per month would easily pay off your smaller cards, which would be a great start! it's pretty encouraging to see those zero balances. then hide your cards if you don't think you can resist spending. give them to your parents. put them in a safety deposit box. something out of sight!
I agree, min. on all but the smallest and pay it off, you will be able to pay a bunch off the very first month, you could knock all this out in no time with $1200 a month in payments. would be nice to have 1 payment but probably a pipe dream in this credit climate to get lent a nice size loan to someone who is completely maxed out
I don't think you will find any normal lenders that would give you a loan. Suggest you don't waste inquiries.
Pay the minimums on all cards and make double sure nothing gets paid late. Pay whatever you can on accounts with highest interest rate. Paying off highest interest will save you the most money, giving you more to pay the others off. Looks like most of the small balance, small limit cards are also the high interest so you will automatically get some more accounts reporting zero balance.
As you get the balance down and less than half of your accounts showing a balance, you should get a better FICO and then can try to get a loan to kill the rest.
What others have said before me.... either paying off the smallest balance first to get a kickstart to paying off, or paying off via the highest interest rate is probably the best.
A non-conventional route would be a consolidated balance loan. I've seen many of these on LendingClub. Essentially it's peer-to-peer borrowing, without bank involvement. I can't speak for how effective it is, as you can't be a lender in Texas yet, but I believe their interest rates for the loans would be much lower than you'd see at a bank, and certainly much lower than the credit cards.
Good luck. Glad to see your trying to get these paid off.
BUT before you start paying these credit cards, Tie all the CC together and hide them somewhere, pay only cash or use debit card for your daily purchases.
What are your minimum payments on each card. You could go back and edit the first post to add it or just repost the cards with the minimum payment amount.
@jj10939 wrote:Hello,
I have read these forums and value your advise and now I need help!
I am 21 years old and when in college I racked up a lot of credit card debt. I'll start from the beginning. When I was 18 I had it in my head that I was going to have good credit. My first credit card was a Discover More card which I got when I was 18 and have always kept the account in good standing. I usually always paid off the balance each month and when I did carry a balance, I made large payments to quickly pay it off. In my second year of college, I applied and was approved for several other credit cards and now they are all pretty much at their limit. Below is my current credit snapshot:
CARD NAME CURRENT BALANCE CREDIT LIMIT INTEREST RATE
DISCOVER MORE 3900 4000 19.99
CITI 3500 3600 14.25
CAPITAL ONE 1450 1500 21.99
DIRECT REWARDS DISC 290 300 18.00
KOHLS 250 1000 21.90
KAY JEWELERS 160 800 23.90
CHASE 2450 2500 10.00 (CLOSED THIS ACCOUNT TO GET LOW INT. RATE)
BEST BUY MC 1100 1200 19.99
MACYS 0 100 23.90
WELLS FARGO 250 300 17.99
US BANK 450 500 21.90
I make $50,000 per year and I am trying to find a loan to pay all of these credit cards off to make ONE payment instead of making $100 here and $400 there. I have about $1200 per month that I am able to apply towards this credit card debt. I have tried to apply for a loan with my bank (Wells Fargo) and they denied me saying that there was no way for them to know that I wouldn't rack up the CL again. (not that I blame them)
So what I am asking for here is to see if there is anyone who can look at my situation and A.) tell me if there is a bank out there who would do this and/or B.) how I should go about paying this down. I have sat down and created a spreadsheet showing what I need to pay to each card each month to be debt free in one year and when I look at it in Excel, it seems easy enough to do, but I am finding that it is more difficult than I thought.
I have never been late on any payments on any card but my credit report does show me being over on my limit with a few of these cards. Any help would be greatly appreciated!
Thank you!
I just went through this, and have insight on it. I sent you a private message here on myFICO.
Payment strategies are not simple.They overlap in their goals.
I see three different strategies that you can take, each different from the other. Which to take is a personal decision based on your personal goals.
The first approach is the financial impact approach. This places less emphasis on current FICO score impacts, and more emphasis on reducing your monthly outlay of interest. This approach is probably the easiest to assess, if that is your focus. Higher balance, and higher interest rate cards are costing you a lot.
Let's put some approx numbers on this. You currently owe $13,800 in CC debt. Assuming an average CC interest rate of approx 20%, then you are currently paying approx. 1.6% of the balance each month just in interest. This is around $221 a month out of pocket just to stay even. This approach puts puts focus, in my opinion, primarily on your Disc, then on CITI, and then on Chase.
The second approach is to focus on current FICO scoring. This approach focus on paying the highes % util cards first, regardless of balance or interest rates.
This very short term approach shows 7 cards at 90% util or above; namely, Disc, CITI, Cap1, DirRew, Chase, and USA Bank.
The third approach is to focus on potential longer-term impacts on your FICO scoring based on how you continue to manage your accounts.
This approach is much more subjective, but I still think it is important. You want, for example, to try to avoid credit limit decreases on your highet credit limit cards, for any CLI will wreak great havoc in your FICO scoring. Your highest CL cards, Disc, CITI, and Chase, are all above 97% util. That is a red flag for a potential CLI.
I think protection of their CL is an important factor.
Putting all of these together, I would definately put first emphasis on the DIsc card. Then,depending on the strategy that is most important to you, CITI, Chase, and Cap1.
It makes no sense to me to pay off the lower balance, lower CL cards first just to show a card that now has $0 balance. That, in my opinion, is not where the bang for the buck is in any of the approaches I think are most important. Number of cards reporting $0 balance is way, way down on the list of FICO score impacts.