cancel
Showing results for 
Search instead for 
Did you mean: 

Help - best way to handle large credit card debt paydown ?!?!

Regular Contributor

Help - best way to handle large credit card debt paydown ?!?!

I repaired my credit several years ago with the help of these forums.  Same story as everyone, DH had a bad work year and we turned to credit cards to make it.  Now I have a large amount of credit card debt I need to get out from under and be debt free other than our mortgage.  I do not trust myself as to make the best decision on how to handle the scenario and need the help of the financial gods in this forum once again.  Also, limited options due to high utilization bringing down my credit scores.  Here are the numbers and not sure which would be the best option - i.e. am I thinking it through before making a mistake!

 

Current Fico scores:  712, 690 & 693

Total credit card:  11

Cards with balances:  7

Total CC debt:  $55,188 

 

Creditor - Interest Rate - CC Limit - Balance - % utilization - Min. Monthly Pmt.

Chase Slate  10th15.99%      7,000.00     4,832.24              0.69       122.00
US Bank17.99%      7,400.00     6,798.31              0.92       165.00
L.L. Bean 4th18.24%      9,550.00     7,842.49              0.82       200.49
Discover It 7th24.24%      8,300.00     7,969.07              0.96       162.00
Amex 18th21.99%      7,500.00     7,167.26              0.96       212.00
Lowe's 8th26.99%    10,000.00     8,825.01              0.88       282.00
Discover 19th19.24%    12,100.00   11,754.44              0.97       240.00

 

Option 1 ) Yesterday, I thought I would apply for a debt consolidation loan through Discover Card Services.  I was approved for $35,000 @ 21.99% rate 60 months @ $966.46/mo.  This doesn't quite cover everything so I could pay off both Discover Cards, Lowe's & Amex leaving me to still pay monthly payments towards the remaining cards - LL Bean, US Bank, Chase Slate.  Also, rate is high just makes it simple having less payments to keep track of (not a big deal really)

 

Option 2) Debt Snowball - using $2,000 a month (this may not always be an option if DH is laid off durning winter months) payoff in 2021 total paid back 76,888 (21,787 in interest).

 

The only other thing I can think of possibly doing is to keep paying down and possibly take out a home equity loan at better interest rate but not sure it's possible to do that until some of this is paid off and my scores are up.

 

I know there is no simple answer and it takes dedication and hard work to pay it off.  I'm just not sure if I should just continue debt snowball or do the discover loan and at least combine a few even if it isn't really saving that much in interest!   Just looking for thoughts, advice or possibly a suggestion I'm not thinking of - 

 

Thank you!

 

 

 

Message 1 of 32
31 REPLIES
Valued Member

Re: Help - best way to handle large credit card debt paydown ?!?!

That rate kinda sucks, most of your cards have lower rates. I know balance transfers can be a bit playing with fire, but you could consider product changing your Chase slate to a freedom, then opening another slate for the 0% interest, no balance transfer fee offer. If you still have more, the bank of America americard has a similar offer with 0% interest and intro no fees on balance transfers. Each of these offers 15 months at 0%.
Message 2 of 32
Regular Contributor

Re: Help - best way to handle large credit card debt paydown ?!?!

I do have a Chase Freedom - not sure if that matters.  Zero balance $3,500 credit line.  I've never had a BOA card - I could check that as well.  I'm just worried about interest rates jumping because I'm searching for credit with credit pulls?

Message 3 of 32
Valued Member

Re: Help - best way to handle large credit card debt paydown ?!?!

You can have 2 freedoms, I Product Changed my Slate to a second Freedom last year, and when I called the rep last week and asked about PCing my Freedom Unlimited they said I could change that to a Freedom as well - not sure if they didn't see I already had 2 but whatever lol.

You can change it to a Freedom Unlimited though if it offers more utility.

Not sure what you mean about interest rates jumping? You mean on your preexisting accounts? I...don't think that is affected by new apps, but I'm not really sure, maybe someone else can shed light on that. But if you mean regarding the intro rates on those cards being higher than 0% for 15 months, I don't think that will happen. It's basically those cards version of a sign up bonus, so either you'll be approved and get the 15 month 0% with intro period no balance transfer fee, or you just won't get the card.
Message 4 of 32
Regular Contributor

Re: Help - best way to handle large credit card debt paydown ?!?!

Yes,  I was referring to the current cards I have going higher in interest if it looked like I was searching for more credit and my score taking hits from the hard pulls.  Thats definately something I can check into , thank you for the information - I'll have to see what they tell me.  It would be worth it to get rid of some of the high interest to help out with the snowball method.

Message 5 of 32
Valued Member

Re: Help - best way to handle large credit card debt paydown ?!?!

Cool, well good luck, even if it would raise some of your interest rates you'll have to run the numbers because obviously some of those cards can/will go to $0 balance after the balance transfers.
Message 6 of 32
Valued Contributor

Re: Help - best way to handle large credit card debt paydown ?!?!


@wrote:
That rate kinda sucks, most of your cards have lower rates. I know balance transfers can be a bit playing with fire, but you could consider product changing your Chase slate to a freedom, then opening another slate for the 0% interest, no balance transfer fee offer. If you still have more, the bank of America americard has a similar offer with 0% interest and intro no fees on balance transfers. Each of these offers 15 months at 0%.

OP is going to have a hard time getting another card at this point, due to utilization on those 7 cards. 




Starting scores: 552 EQ, 570 TU, 558 EX Current scores (12/29/17): 742 EQ 735 TU 752 EX
Message 7 of 32
Valued Member

Re: Help - best way to handle large credit card debt paydown ?!?!

Hmm good point. I don't imagine it's possible to balance transfer a personal loan? She could get that Discover loan then balance transfer it. Off hand I'd assume the bankamericard is easier to get than the Slate.
Message 8 of 32
Frequent Contributor

Re: Help - best way to handle large credit card debt paydown ?!?!


@wrote:

I repaired my credit several years ago with the help of these forums.  Same story as everyone, DH had a bad work year and we turned to credit cards to make it.  Now I have a large amount of credit card debt I need to get out from under and be debt free other than our mortgage.  I do not trust myself as to make the best decision on how to handle the scenario and need the help of the financial gods in this forum once again.  Also, limited options due to high utilization bringing down my credit scores.  Here are the numbers and not sure which would be the best option - i.e. am I thinking it through before making a mistake!

 

Current Fico scores:  712, 690 & 693

Total credit card:  11

Cards with balances:  7

Total CC debt:  $55,188 

 

Creditor - Interest Rate - CC Limit - Balance - % utilization - Min. Monthly Pmt.

Chase Slate  10th15.99%      7,000.00     4,832.24              0.69       122.00
US Bank17.99%      7,400.00     6,798.31              0.92       165.00
L.L. Bean 4th18.24%      9,550.00     7,842.49              0.82       200.49
Discover It 7th24.24%      8,300.00     7,969.07              0.96       162.00
Amex 18th21.99%      7,500.00     7,167.26              0.96       212.00
Lowe's 8th26.99%    10,000.00     8,825.01              0.88       282.00
Discover 19th19.24%    12,100.00   11,754.44              0.97       240.00

 

Option 1 ) Yesterday, I thought I would apply for a debt consolidation loan through Discover Card Services.  I was approved for $35,000 @ 21.99% rate 60 months @ $966.46/mo.  This doesn't quite cover everything so I could pay off both Discover Cards, Lowe's & Amex leaving me to still pay monthly payments towards the remaining cards - LL Bean, US Bank, Chase Slate.  Also, rate is high just makes it simple having less payments to keep track of (not a big deal really)

 

NO!  Absolutely not!  First of all you would be taking out a loan to pay off some cards that have a lower interest rate than the interest rate on your loan.  And the minimum payment on those cards is only $896 so you actually end up paying more money by taking out the loan.  IF you really want to take out the loan, I would only consider it for the Discover IT and the Lowe's card if the monthly payment was less than the minimum payment on those two cards.  

 

Option 2) Debt Snowball - using $2,000 a month (this may not always be an option if DH is laid off durning winter months) payoff in 2021 total paid back 76,888 (21,787 in interest).

 

I personally found this Debt Reduction Calculator to be really helpful when trying to figure out a strategy for repaying my student loans.  For my situation, the Avalanche method is best, but play around with it and see what works for you.  You are definitely at risk for AA, so you may want to get everything at least under 89% and then start a payoff plan rather than leaving some of them so close to maxed out.

 

The only other thing I can think of possibly doing is to keep paying down and possibly take out a home equity loan at better interest rate but not sure it's possible to do that until some of this is paid off and my scores are up.

 

This might be an option to explore, but you will definitely need to pay things down before you can do anything.

 

I know there is no simple answer and it takes dedication and hard work to pay it off.  I'm just not sure if I should just continue debt snowball or do the discover loan and at least combine a few even if it isn't really saving that much in interest!   Just looking for thoughts, advice or possibly a suggestion I'm not thinking of - 

 

Thank you!

 

 

 


 

FICO8 Scores as of 8/8/17: EQ-643 TU-644 EX-629
Current FICO8 Scores as of 2/7/18: EQ-665 TU-665EX-681
Current Mortgage Scores: EQ-686 TU-666 EX-642
Goal: all FICO8s above 700

Credit Card Lineup: Capital One Quiksilver One - $850, Torrid - $3,000, Credit One - $950, Wayfair - $4,100, Victoria's Secret - $1,500, Overstock - $3,650, Discover it - $9,500, Amazon Store Card - $200, Capital One Platinum - $3,000, Care Credt - $1,500
Message 9 of 32
Frequent Contributor

Re: Help - best way to handle large credit card debt paydown ?!?!

Echo 's advice to not take the consolidation loan (and consider the rest of her/his advice to be sound).

2019 Goal: 800+ (the 30-day late drops in Q1 2019)
2018 Goals: garden, 750+, garden, put away 3 months' savings, garden, CO Savor/QS, garden


Experian is the canary in my coal mine.

EQ7486 INQ (3 CC, 2 mort, 1 auto)
EX7177 INQ (3 CC, 2 HELoan, 2 mort)
TU8005 INQ (3 CC, 2 mort)
4/24 < 8% AAoA 94-100m | AoYA 2m | AoOA 18y
Take the myFICO Fitness Challenge
Gardening 'til at least August 2018. Well, anyway, that's the plan ...
Message 10 of 32