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Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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CC Payoff Tactics

[ Edited ]

Whenever one is paying down CCs and/or trying to get their CC util down, always consider your overall CC util.

If for example the util on one CC is 84%, but one's overall util is 45%, then a couple of BTs could bring everything under 50% util--within a couple of days, then probably one billing cycle of the CCs for the CCCs to report.

Obviously paying debt down is better than transferring debt from Peter to Paul, but everyone's situation is different.

Person A might have a relatively small amount of debt compared to their income and they might thru payments alone get their util down on all CCs within a couple of months.

However, Person B might be looking at a longer repayment schedule, perhaps a couple of years rather than a couple of months. In that case, it could pay, and a lot, to get one's overall util down right away thru BTs. This could give a score boost and allow one to qualify for prime CCs or better prime CCs with lower APRs.

A BT can make some CCCs nervous that you're about to close the CC thus ending a revenue stream for them. You can confirm their fears by calling and asking about an APR reduction and CLI. Tell them straight out, "I'm trying to get rid of debt, and I'll planning to close my high interest CCs." Be nice, polite, and ask whether they can help you. Don't threaten, kick or scream. Even if they say no, be nice and thank them for their time. Tomorrow, or the next day, or next month, you might get the same CSR on the right day at the right time with the right offer available and get both a lower APR and a CLI.

If you have multiple CCs, here are my steps to try and get your APRs down and your CLs up.

1) Get the util of your CC with the highest APR down under 50%, preferably to about 40%. Pay the debt down, do a BT, or both. Once they've cashed the check(s), give 'em a call and ask about getting an APR reduction and a CLI. Tell 'em you're trying to pay down some debt, this is your highest interest CC, and you're hoping they can help you out.

2) If they say yes to a lower APR, then another CC becomes your highest APR CC. Repeat Step 1 for your new highest APR CC.

3) If they say no, then get the CC down to 10% util. Pay down, BT, or both. Once they cash that check. Call 'em and ask again about an APR reduction and a CLI. If they say yes to a lower APR, then another CC becomes your highest APR CC. Repeat Step 1 for your new highest APR CC.

4) If they say no, then pay the CC down to $0 and stick it in your sock drawer. Repeat Step 1 for you next highest APR CC.

The CCC can choose to collect lower interest on some money or higher interest on $0. Many can do the math.



Message Edited by Noah_Bodie on 09-06-2007 09:40 PM
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: CC Payoff Tactics

Think it pays to pay off all debt at once or say over a six month period? FICO prefers the slower approach as far as I can tell.
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Re: CC Payoff Tactics

If a windfall comes your way, start banging down all the debt you can. Don't wanna leave money sitting earning 5 or 6 percent interest while you're paying 18 percent or more.
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: CC Payoff Tactics

I did so I'll let you know if I cross the 700 line.
Established Member
bobkelly
Posts: 51
Registered: ‎06-25-2007
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Re: CC Payoff Tactics

Certainlly doesn't hurt to demand credit card companies to lower your rates.  It can be part of a tactic  to lower or perhaps eliminate your debts one day.  Still, for most borrowers, time can be a bigger obstacle in overcoming debt.  If it's paid in full, it won't matter what your interest rate was. 
 
For that matter, your FICO score won't matter much if you're not planning on getting in the lifelong debt trap.  Do you think Bill Gates cares about his FICO score?
 
(BTW, Noah hates me so I'm sure he will disagree, and loudly I might add.  Probably a cheap shot with a dose of bad humor to boot. )
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: CC Payoff Tactics



bobkelly wrote:
Certainlly doesn't hurt to demand credit card companies to lower your rates.  It can be part of a tactic  to lower or perhaps eliminate your debts one day.  Still, for most borrowers, time can be a bigger obstacle in overcoming debt.  If it's paid in full, it won't matter what your interest rate was. 
 
For that matter, your FICO score won't matter much if you're not planning on getting in the lifelong debt trap.  Do you think Bill Gates cares about his FICO score?
 
(BTW, Noah hates me so I'm sure he will disagree, and loudly I might add.  Probably a cheap shot with a dose of bad humor to boot. )


Noah is not racist. He hates everyone equally. :smileytongue:
 
Seriously though, no one has anything against you. But this is not the site to post the same message over and over again with a ginormous font. People are here to build their scores, if they want debt advice they will ask for it.
Frequent Contributor
Lori344
Posts: 313
Registered: ‎04-01-2007
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Re: CC Payoff Tactics



bobkelly wrote:
(BTW, Noah hates me so I'm sure he will disagree, and loudly I might add.  Probably a cheap shot with a dose of bad humor to boot. )


 
Talk about a "cheap shop"?
 
.... alright already bobkelly :smileysad:

Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Re: CC Payoff Tactics



bobkelly wrote:
Certainlly doesn't hurt to demand credit card companies to lower your rates.  It can be part of a tactic  to lower or perhaps eliminate your debts one day.  Still, for most borrowers, time can be a bigger obstacle in overcoming debt.  If it's paid in full, it won't matter what your interest rate was. 
 
For that matter, your FICO score won't matter much if you're not planning on getting in the lifelong debt trap.  Do you think Bill Gates cares about his FICO score?
 
(BTW, Noah hates me so I'm sure he will disagree, and loudly I might add.  Probably a cheap shot with a dose of bad humor to boot. )


It's true that a PIF CC doesn't adversely impact you--trouble is most folks aren't there yet. They are still trying to get there. No one is ignorant of the fact that being debt free is desirable. It's the getting there part and how to get there faster that most wanna know about.
 
I know personally that one can bully CCCs into compliance. State Farm Bank is a very conservative lender, and I've pressured them into a CLI and APR reduction. It's not 100%, but that's why Louis Cyphre created sock drawers. [Louis Cyphre is an extremely esoteric reference to Satan from the movie Angel Heart. Louis Cyphre = Lucifer. Movie scared me awake--one of the few. This is but a subtle inference that I worship the Devil. I'm told it's not needed as he worships me.]
 
It's true that a PIF CC which one keeps PIF each month doesn't incur interest charges, so the interest rate be danged. However, one never knows what the future holds. As such, it's still a good idea if one has PIF CCs, to seek lower APRs, higher CLs, and better terms. If it's AMEX and any of a myriad of other OCs, seek to get the CC upgraded to a better CC with better terms, no annual fee, more attractive rewards, etc.
 
Of course the wealthy don't care about their FICOs. Donald Trump could walk outta prison having lost every dime to his name after going bankrupt and pleading guilty to a myriad of criminal charges, and the banks would be lined up to give him money for his next deal. Poor people can't get credit and rich people don't need credit. It's those of us in the middle who need credit.
 
bob, buddy, where's the love? I love my wife and kids, but I disagree with them.
 
Fear leads to anger. Anger leads to hate. Hate leads to suffering, not disagreement. I sense much fear in you.
 
I thought rich guys could take a punch? What gives? Either you BKed overnight, or Mom caught you surfing the Internet and made you go outside to play because summer is gonna be over soon and you'll be back in school--only it's no longer middle school, it's the big leagues, high school.
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Super Contributor
MidnightVoice
Posts: 8,160
Registered: ‎03-25-2007
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Re: CC Payoff Tactics



bobkelly wrote:
Certainlly doesn't hurt to demand credit card companies to lower your rates.  It can be part of a tactic  to lower or perhaps eliminate your debts one day.  Still, for most borrowers, time can be a bigger obstacle in overcoming debt.  If it's paid in full, it won't matter what your interest rate was. 
 
For that matter, your FICO score won't matter much if you're not planning on getting in the lifelong debt trap. 
 


I am not in debt (apart from mortgage), but my scores are still important to me.  A cheap auto loan is CHEAPER than paying in cash if I put the cash in my IRA instead.  With a high score I actually spend less money that way
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