Paying off credit cards

[Anonymous]

I have several credit cards I need to pay off - From looking at the FICO Stimulation, it's better to pay larger amounts over time, rather than paying it all off at once.

This is my situation:

My job is steady at $15/hr, getting paid weekly. Starting in October, we will be going to biweekly.

I have 2 student loans, which I am currently paying $50/each monthly.

My monthly expenses are about $350-$400 (excluding credit card payments).
My credit card payments are about $235 (minimum).

Revolving credit card accounts: $7,700
Installment loans (Student loans): $5,800

I'm 23 years old; no kids.

I currently have $10,650 in my bank account. Do I pay all my credit card debt or do I pay half? I'm really sick of paying all the interest, but yet, I am a worry wort about living paycheck-to-paycheck. What should I do?

[skyisthelimit]

Hi Klbrend and welcome to the forums.  The simulator is never 100% accurate, and a good rule of thumb is never go over 10% tottaly UTI.  I would recomend paying off the cards, and only charge if you get into a "serious" emergency...It looks like your good at saving.  

[DaveSignal]

You will get the biggest increase if you pay it all off but use one card a little just before the statement hits so you have one card that reports a small balance (less than 10%).

If most of your cards report $0 and only 1 reports a small balance, FICO scores this higher than a small balance across all cards.

If you have a lot of cards, you might be able to leave a small balance on 2 since I think FICO scores it as a 'percentage of cards with balances'.

The way I do it is that I just pay all my balances in full a few days before the statement, but have one card with a high limit that I continue to use continuously, even just before the statement hits.... so it ends up reporting a balance that is less than 10%.

[compassion101]

First, figure out if it is interest savings or credit score you seek. The part of your credit score affected by utilization has no memory, so whether you pay it now or later doesn't much matter unless you are applying for credit in the meantime or fear AA from a CCC.

How secure is your income, what is your lifestyle? These days I'd prefer having cash available in case of tough times, so you need some reserve before paying off CCs. Living paycheck to paycheck is very stressful, and IMO it's worth carrying some balance in order to avoid that if necessary. Figure out a comfortable reserve for you and then tackle the balances.

Another option if you think you can qualify for a 0% intro card would be transfer balances. If you can only qualify with low util, then pay off the balances now even if it runs your bank account to below the reserve you want, then apply for the 0% and charge monthly expenses back to the new 0% card till you get your comfortable reserve. Just make sure you are living below your means for a while to actually get it paid off.

[Revelate]

Hey Kibend:

Pay all the credit card debt immediately.

Credit card debt: 20% (give or take)

Checking/Savings account: ~2%.

You're losing ground every day on that financially, ~1.5%/month loss actually... and that's ugly math any way you look at it.  Also that's not living paycheck to paycheck, you're still talking a few G's reserve, and your income is higher than your expenditures.  Your FICO will be fine either way, and it takes a backseat finances.  Airstrike the CC balances, don't let them accrue again (unless you have to, loss of job for example is a good time to float balances) and your savings rate will go up assuming your expenditures stay the same.