Senior Contributor
Posts: 4,635
Registered: ‎03-11-2007
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