A little confused on closed accounts and a balance

[DrunkPenguin]

Hi all,

I have sort of cleaned up my credit act over the years and am down to just two 30 day lates (one will fall in August and the last next March 2013). I have never been late on anything in near seven years as posted above but I have carried very high balances on credit cards. I admit I love nice things and perhaps why many of us end up on a forum like this.

Instead of spending the work bonus this year on yet another toy (dang toys are fun aren't they?) I am really focusing on my balances. The question-

I was one of those with a Proviian Credit Card that transferred to a Chase and was canceled. This of course annoyed me as I was never late with Providian or Chase but I did have a high balance of around $9K. The card has been closed for a number of years and the APR is at the limit at near 32%. I am down to around $5500 balance

I have a Macys account and they are strange. You have the normal revolving account and if you buy anything like furniture or rugs they have what is called a Major purchase account. For whatever reason they divide this as two different accounts on your credit report instead of a one lump sum account. The balance on both is similar to the closed Chase account mentioned above. Apr is 24.25%.

My bonus can pay off one or the other. I have the closed account with the higher APR or I have the Macys account that is active and would show a ZERO balance on two accounts if paid off.

I know the higher APR is the logical choice but I can gain/show two accounts with a zero balance if I go that route. How bad is a closed account with a $5500 balance affecting my score? Which is the better path do you thing in the eyes of FICO?

And yes I will still have other cards to pay off but I think I have narrowed down the choice to the two above. (I will still have $25k to go after the above).

Thanks- Really sticking to my no toy year. My real score has been at 689 or so for a very long time. Ready to get into the 725 plu range by years end.

[Anonymous]

Just my two cents but I would still go with the higher APR one!  It's just the more logical one all around concidering it apprears you will be pay on the cards for quite some time in order to get all caught up.  Its the TIME part that equals more money on the higher APR one so it's the most logical to pay off sooner, or first in your case!

Good Luck my friend and stay true to yourself and ease up on the toys!  Make what you have already last longer!

[marty56]

Normaly a FICO friendly way to get out of CC debt is to start the the card with the smallest balance until it is PIF'd and then the next smallest balance until all are PIF'd.  In our case I would  go aafter the cards with the highest interest rate since 25K off CC debt is a lot ao I would not worry about your FICO score until your CC debt is gone.

Another option would be to enter a DMP program which is FICO freindly and will reduce your interest rates so it is money friendly as well.  Just another option to explore.