Best pay down option with large gift???

[CH-7-Mission-Accomplished]

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@Anonymous wrote:

Thanks for the replies.

It is slightly complicated with the near future refi. The current mortgage is 7.5% on an original $211,000 amount financed. I can get 3.85% today on $125,000 and save over $700 in monthly payment. That coupled with reduction in credit card payments should put me in a very good position to greatly reduce the remaining CC debt over the next year. If the house apraises high then there is the option of rolling additional mid teen interst cards into that note.

I may be overthinking it. That Mortgage rate is not going to come down substantially with an increase from 670 to say 720 FICO. Maybe under 3.5%.??

I'm certainly leaning toward option 1 and get that interest off my back. 

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Can you please post a list of your credit cards with balances owing sorted by highest balance first?  So just do a line listing showing individual card balance and rate for that card ... and also the credit limit for that card.  

This is an easier way to deal with the question.  It becomes obvious when you are dealing with specific numbers.

[CH-7-Mission-Accomplished]

Total credit card debt = $58,000

Utilization 88%

If you start with $58,000 owing and that is 88%, and you use 30K to pay down your cards, you should be at roughly half the utilization, so 44%, not 58%.  It doesn't matter which cards you pay off, this would be the case.

How did you come up with such a high utilization after paying down from $58,000 to $28,000?

[TRC_WA]

Somebody's math may be off but at any rate I was going by the numbers and the wording.

OP said option 1 is paying off the 8 20% cards... then paying down the other 8 to less than 80% UTI.  $500 monthly interest savings.

OP said option 2 is paying down all 16 cards to less than 60%.  $300 monthly interest savings.

That being said, option 1 is a no brainer.  8 cards with a $0 balance will yield a higher FICO and a better refi rate.  It's much better than 16 cards with a balance. $200 extra in interest savings per month as well.

I see no reason at all to go with option 2.  None.  Unless you want a lower FICO and want to pay more in interest.

[Anonymous]

My bad on the math. I've got it in an excel spread sheet.

Option 1 does go to 44% utilization totoal on 16 cards with 8 of them with a zero balance.

[CH-7-Mission-Accomplished]

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@TRC_WA wrote:

Somebody's math may be off but at any rate I was going by the numbers and the wording.

OP said option 1 is paying off the 8 20% cards... then paying down the other 8 to less than 80% UTI.  $500 monthly interest savings.

OP said option 2 is paying down all 16 cards to less than 60%.  $300 monthly interest savings.

That being said, option 1 is a no brainer.  8 cards with a $0 balance will yield a higher FICO and a better refi rate.  It's much better than 16 cards with a balance. $200 extra in interest savings per month as well.

I see no reason at all to go with option 2.  None.  Unless you want a lower FICO and want to pay more in interest.

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Okay, TRC, this is **bleep**-for-Tat War!  LOL.

You are correct that there is no reason at all to do option 2.  It's just silly.

The question is what to do with option #1.  Does OP mean the 20% cards have 20% utilization or 20% interest?  

So let's assume there's 16 cards and we have agreed to pay off eight.  Then the question is what to do with the remaining money?  OP wants to pay the remaining 8 cards down to 80% utilization.  I think this is wrong.  Rather that doing that, OP should pay off one or more cards in full until the money is gone, rather than have a bunch of cards now somewhere less than 80%.  

I hope my logic makes sense to you because IDK **bleep** I'm talking about.  LOL.

OP said option 1 is paying off the 8 20% cards... then paying down the other 8 to less than 80% UTI.  $500 monthly interest savings.

[Anonymous]

It takes $26,902 to pay off 8 cards over 20% APR

The reamining 8 cards are all under 15% APR. Spreading out the remaining $3k over those 8 cards brings each under 80%. Most are about 95% now.

I've read here that haveing one or two cards over 90% hits the score even if the total UTI is low. That's why I thought getting all below 80% made sense.

[CH-7-Mission-Accomplished]

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@Anonymous wrote:

It takes $26,902 to pay off 8 cards over 20% APR

The reamining 8 cards are all under 15% APR. Spreading out the remaining $3k over those 8 cards brings each under 80%. Most are about 95% now.

I've read here that haveing one or two cards over 90% hits the score even if the total UTI is low. That's why I thought getting all below 80% made sense.

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You are correct.  90% is the point that you get a hard ding on FICO.  So make sure every card is under 90%.  Then whether you choose to reduce them all to 80%, or you keep several cards just under 90% and one card at say 70% or whatever, it doesn't matter.

At this point it is really splitting hairs.

You have the right information.

[Anonymous]

I greatly appreciate the replies!

BTW I added up the interest for June on the 8 worst cards and it is $559.05. Couple that with the reduced interest on the others and I should be well over $600 in monthly savings to continue to pay down the CC debt going forward.

[TRC_WA]

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@CH-7-Mission-Accomplished wrote:

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@TRC_WA wrote:

Somebody's math may be off but at any rate I was going by the numbers and the wording.

OP said option 1 is paying off the 8 20% cards... then paying down the other 8 to less than 80% UTI.  $500 monthly interest savings.

OP said option 2 is paying down all 16 cards to less than 60%.  $300 monthly interest savings.

That being said, option 1 is a no brainer.  8 cards with a $0 balance will yield a higher FICO and a better refi rate.  It's much better than 16 cards with a balance. $200 extra in interest savings per month as well.

I see no reason at all to go with option 2.  None.  Unless you want a lower FICO and want to pay more in interest.

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Okay, TRC, this is **bleep**-for-Tat War!  LOL.

You are correct that there is no reason at all to do option 2.  It's just silly.

The question is what to do with option #1.  Does OP mean the 20% cards have 20% utilization or 20% interest?  

So let's assume there's 16 cards and we have agreed to pay off eight.  Then the question is what to do with the remaining money?  OP wants to pay the remaining 8 cards down to 80% utilization.  I think this is wrong.  Rather that doing that, OP should pay off one or more cards in full until the money is gone, rather than have a bunch of cards now somewhere less than 80%.  

I hope my logic makes sense to you because IDK **bleep** I'm talking about.  LOL.

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Yeah it makes sense.  What to do with the remaining money AFTER paying off the 8 cards with a 20% interest rate is a good question.  As long as balances are below 90% putting all the remaining money on one remaining card (with the highest interest rate) isn't a bad idea.

Either way, paying off the 8 cards first with option 1 is the correct thing to do.