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what cards to pay down?

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giosan32
Valued Member

what cards to pay down?

Hello everyone, 

       I received about 5k for a work bonus, I want to boost my credit and pay down or pay off some cards.  Just curious if its better to pay a few completely off and still have the other ones be close to maxed out.  Or should I pay on all of them and get the balances down to about 50% across the board, thanks for any help.

Message 1 of 9
8 REPLIES 8
chalupaman
Super Contributor

Re: what cards to pay down?

Pay the ones with the highest APR and ones where you're most maxed out first and then take care of the rest if you can. You can even consider some balance transfer cards to help you out as well.

Tradelines: Macy’s - $18k, Penfed Power Cash Rewards - $10k, Ethan Allen (TD Bank) - $5.7k, Kay Jewelers - $5.5k, Appliances Connection - $5.3k, Jared - $5.25k, Best Buy (Citi) - $5k, Dell Preferred Account - $3.5k, Samsung - $3.2k, Firestone CFNA - $3.2k, Capital One Platinum - $3k, Mercury MC - $2.25k, Williams Sonoma - $2.1k, Wayfair (Fortiva) - $2k, Amazon Store Card - $1.8k, Apple Card - $1.7k, NFCU cashRewards - $1.5k, CareCredit - $1.5k, B&H Photo - $1.5k, Adorama - $1.25k, Ebay MC - $1k, Sam’s Club MC - $1k, American Eagle - $1k, Ollo MC - $600, Mission Lane Visa - $500, NY & Company - $500, Walgreens - $500, Home Depot - $500, Target RED Card - $500, CapOne Secured MC 0 AF - $500, Penfed Overdraft LOC - $500

Current FICOS: Mid 640s-50s on all reports, Ch 7 BK D/C Aug 2019
Starting scores: EX - 534, EQ - 574, TU - 516 | Total TLs: $91k approx | Total Utilization: 17%, getting this back down
Message 2 of 9
kdm31091
Super Contributor

Re: what cards to pay down?

Depends on your perspective.

 

For me personally, it motivates me better to pay one completely off, then start on the next one, etc. Opinions vary. If you start w the smallest balance and pay one off at a time, you may feel a better sense of accomplishment vs. tiny payments across several cards. Whatever keeps you going in the process.

 

For maximum score points, you'd want to reduce util more rapidly --> pay down a little on each card. I just find this to seem less motivational. But it depends how you feel. I recommend starting with the smallest balance and going from there. You'll feel like you accomplished more and it's much easier to keep going. Plus, then at least you've freed up a card completely.

Message 3 of 9
red259
Super Contributor

Re: what cards to pay down?

I would focus on cards that have a high APR first (seriously why would you want to pay more interest if you can avoid it). If the APRs are the same then focus on the cards which have higher utilization. If the cards all have the same util and same APR then I would look for lenders that really don't like balances being carried or in the alternative if its only a few cards and you have enough to pay off all but one card I would do that, since it will help your credit score. The card with the hgihest APR really should be first though because its costing you the most money.  

;
Starting Score: EQ: 714, TU 684
Current Score: EQ: 725 7/30/13, TU 684 6/2013, Exp 828 5/2018, Last App 8/5/17
Goal Score: 800 (Achieved!) In garden until Sepetember 2019
Message 4 of 9
Anonymous
Not applicable

Re: what cards to pay down?


@kdm31091 wrote:

Depends on your perspective.

 

For me personally, it motivates me better to pay one completely off, then start on the next one, etc. Opinions vary. If you start w the smallest balance and pay one off at a time, you may feel a better sense of accomplishment vs. tiny payments across several cards. Whatever keeps you going in the process.

 

For maximum score points, you'd want to reduce util more rapidly --> pay down a little on each card. I just find this to seem less motivational. But it depends how you feel. I recommend starting with the smallest balance and going from there. You'll feel like you accomplished more and it's much easier to keep going. Plus, then at least you've freed up a card completely.


The above post sums it up. It really depends. If you need maximum bang for your buck, FICO scorewise, in the short-term, you should go ahead and pay down all your cards a little. Each maxed out card significantly hurts your score. Utility drops at certain thresholds seem to make a bigger difference, but bringing a maxed out card to under 80% utilization generally results in a noticeable change. 

 

Moreover, issuers have no room to CLD a maxed out card, but a lower utilization card can be CLD'd easily. If you pay down each card a bit, an issuer will have less room to CLD than if you pay down one card fully. However, there is no guarantee how issuers will react to your strategy of paying down one card first or all cards a little. The latter strategy leaves less room for damage if one issuer chooses to CLD your card since a CLD will increase utilization and impact your score. 

 

If short-term score is not a consideration (i.e. not looking for credit), then paying down your highest APR card first makes most sense. Things like CLDs and other AAs are not a major factor if you are willing to ignore your credit score in the short-term to pay your bills off faster. Personally, I'd lean towards paying the highest APR card down first unless I needed credit, and if I had maxed out cards I probably should not be looking for credit until I get my finances in order again. 

 

As the prior poster mentioned, there is no one size fits all strategy. Paying the highest APR card first is the fastest and least expensive way to pay off your debt. However, other factors might need to be considered. 

Message 5 of 9
Anonymous
Not applicable

Re: what cards to pay down?


@giosan32 wrote:

Hello everyone, 

       I received about 5k for a work bonus, I want to boost my credit and pay down or pay off some cards.  Just curious if its better to pay a few completely off and still have the other ones be close to maxed out.  Or should I pay on all of them and get the balances down to about 50% across the board, thanks for any help.


Highest APR first.

Message 6 of 9
red259
Super Contributor

Re: what cards to pay down?


@Anonymous wrote:

@kdm31091 wrote:

Depends on your perspective.

 

For me personally, it motivates me better to pay one completely off, then start on the next one, etc. Opinions vary. If you start w the smallest balance and pay one off at a time, you may feel a better sense of accomplishment vs. tiny payments across several cards. Whatever keeps you going in the process.

 

For maximum score points, you'd want to reduce util more rapidly --> pay down a little on each card. I just find this to seem less motivational. But it depends how you feel. I recommend starting with the smallest balance and going from there. You'll feel like you accomplished more and it's much easier to keep going. Plus, then at least you've freed up a card completely.


The above post sums it up. It really depends. If you need maximum bang for your buck, FICO scorewise, in the short-term, you should go ahead and pay down all your cards a little. Each maxed out card significantly hurts your score. Utility drops at certain thresholds seem to make a bigger difference, but bringing a maxed out card to under 80% utilization generally results in a noticeable change. 

 

Moreover, issuers have no room to CLD a maxed out card, but a lower utilization card can be CLD'd easily. If you pay down each card a bit, an issuer will have less room to CLD than if you pay down one card fully. However, there is no guarantee how issuers will react to your strategy of paying down one card first or all cards a little. The latter strategy leaves less room for damage if one issuer chooses to CLD your card since a CLD will increase utilization and impact your score. 

 

If short-term score is not a consideration (i.e. not looking for credit), then paying down your highest APR card first makes most sense. Things like CLDs and other AAs are not a major factor if you are willing to ignore your credit score in the short-term to pay your bills off faster. Personally, I'd lean towards paying the highest APR card down first unless I needed credit, and if I had maxed out cards I probably should not be looking for credit until I get my finances in order again. 

 

As the prior poster mentioned, there is no one size fits all strategy. Paying the highest APR card first is the fastest and least expensive way to pay off your debt. However, other factors might need to be considered. 


+1 This really says it all. If someone is unable to pay off their current cards and is carrying balances then more credit cards is not the answer. If someone is just trying to get their finances in order the highest apr card should get paid first to minmize the overall cost. 

;
Starting Score: EQ: 714, TU 684
Current Score: EQ: 725 7/30/13, TU 684 6/2013, Exp 828 5/2018, Last App 8/5/17
Goal Score: 800 (Achieved!) In garden until Sepetember 2019
Message 7 of 9
giosan32
Valued Member

Re: what cards to pay down?

Thanks everyone I have a solid game plan now

Message 8 of 9
Anonymous
Not applicable

Re: what cards to pay down?


@giosan32 wrote:

Thanks everyone I have a solid game plan now


Glad to help.

Message 9 of 9
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