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Most effective way to pay off cards?

Valued Member

Most effective way to pay off cards?

Wow, it’s been a while since I last poked my head around here.


Unfortunately, I’ve returned under some pretty crummy circumstances. In the last year, I’ve moved out of my parents’ home, changed jobs to a new facility within the same company, chugged along in school, and, in the process, racked up a ton of credit card debt which I can not justify in the least: $6,000 spread across seven cards. Yeah, I’m not happy about that. And most of it is on stupid stuff like electronics and fast food. Oh, the life of a college kid...


I wouldn’t have even thought about it if it weren’t for an ill-timed insurance payment that overdrafted my checking account and caused me to lose $220 from fees. (I’m still not happy about that, either. Five years and they give me the cold shoulder...) But I’m trying to see it as a blessing in disguise, as it made me stop and really think about what I’m doing financially.


I’ve set myself up at a credit union with both checking and savings (something I didn’t have before), and I just received the remainder of my student loan money for the semester that starts next week. (Oh, boy!) Also, if these tax refund estimators are to be believed, I should be getting an extremely nice amount back from the IRS this year, but I’m not holding my breath on that last one. But now that I’m set back up, I’d really like some advice as to where I should go from here to pay down my balances.


One idea I had was to get a card that I could use as a low-interest balance-transfer card and use that solely for paying down balances without the ~20% interest that is currently on nearly every card I have. I’d use one I have already, but the only ones without balances are the store cards that I never use. I have an offer from Household/HSBC for 0% APR balances transfers for 12 months. My only worry is that I’d be getting yet another card. Seems a bit counter-intuitive, no?


I’ve been receiving promo letters from local companies offering the personal loans to pay off bills, but I’ve been reading that those are bad for your FICO, so I’m not going to even try that route...


Is there anything else I could try? I’m a bit rusty on all this now, but I’m going to get this fixed.


(Oh, and just to note: none of my accounts are past due. I’ve been at most a few days late with a payment, happening once each on two separate accounts. Yeah, another d’oh moment, I know.)

2/2008 :: TU 610 :: EQ 610 :: EX 638 :: Beginning scores
2/2009 :: TU 699 :: EQ 697 :: EX 690 :: 1-year mark
2/2010 :: TU 682 :: EQ 670 :: 2-year mark
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Moderator Emeritus

Re: Most effective way to pay off cards?

I wouldn't get another card. Score-wise, if you did the math, you probably wouldn't much of a score increase by adding another card. In fact, you'd likely see an initial loss by adding one.


If I was in that situation, and I have been, I would tighten my financial belt and do an aggressive debt paydown. $6,000 isn't a whole lot. You can probably knock that down in a few months. I'd also re-evaluate how you got there and make changes to your budget accordingly.


Get organized too. Do whatever it takes to never be late again. CCs ratejack if you are late and that'll cost you extra.


I wouldn't get a loan. You are right in that CFLs (like from Citifinancial, Beneficial Financial, Wells Fargo Financial, etc.) can hurt your score a little, or at least result in an annoying red flag for the next 10+ years.

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