Pay down all CCs to 30% or pay off some 100%?

JMMD · ‎01-31-2016

We have 7 credit cards with varying levels of UTI. One of our goals is to raise our credit score but we also want to pay these off as quickly as possible. We planned on doing the snowball menthod ie: Dave Ramsey but I was wondering if we'd be better off paying all the cards down to 30% UTI and then try to snow ball starting with the smallest one. I know by paying them down to 30% our monthly payments will go down so we should have extra for the snowball. Thoughts?

takeshi74 · ‎02-01-2016

Not enough info to really say so here's the general info.

30% is a suggested max but it is far from ideal. If you have cards that are maxed (>90%) then you'll want to get them down ASAP to avoid adverse action. Even cards at high limit can put you at risk if they've been like that for a long time.

Tackling highest APR first is the way to go to save on interest. However, tackling smalled balances first is suggested for those that would benefit from the morale boost in eliminating balances. Having fewer payments can also be beneficial.

The way to go really depends on the specifics of your situation and your preferences. Don't worry abotu score until you get your balances paid down/off. Yuor scores will improve by going so anyway.

Anonymous · ‎02-01-2016

I was considering this same thing last night. In my case, I have 2 cards with low balances ($160 & $280) I am planning to pay those off first. Simply since it will be easier to manage fewer balances. (and it does give a mental boost seeing $0 balance)

After that, I am planning to pay down my highest balance (which is also the highest APR) After I get that one down below 30%, I plan to pay off the remaining 2 cards with balances to make sure they are all below 30%. Then I'll finish off the first balance as the other 2 cards with balances will have 0% for a few more months.

It is basically as mentioned above. While each particular case is different, I agree that you should balance paying off low balance cards, high UT cards & highest APR cards first. The order would depend on the specific balances and how fast you can pay the low ones off. I have read that having high usage on one card can have different affects depending on you specific credit profile so while you want an overall UT as low as possible, the specic UT per card can have different levels of impact.