topic Re: Paydown opinions in Credit Cards

Paydown opinions

klarso11 — Sat, 03 Dec 2016 18:19:33 GMT

Okay folks, here's the scenario:

I have 26 credit cards, 12 of which have a zero balance. Of the remaining 14, 8 of these have balances in the 10% - 30% range. The remaining 6 cards are all around 55% with just 1 card at 66%. ALL 6 of these cards are low or 0% cards with balance transfer balances.

Am I better off concentrating on getting the high balance cards under 30% or should I payoff as many of the smaller (higher interest %) cards as quickly as I can? My goals are improving credit scores which dropped with recent new home build and all that goes with that. I should add that the amount needed to bring all 6 cards under 30% would be more than enough to zero balance the 8 cards already under 30% utilization.

Total balances are just under $20K with available limits totalling $135K. Long term I have the ability to payoff ALL balances in the next 12 - 16 months.

Thanks in advance for any/all input!

Re: Paydown opinions

SouthJamaica — Sat, 03 Dec 2016 21:12:48 GMT

@klarso11 wrote:
Okay folks, here's the scenario:

I have 26 credit cards, 12 of which have a zero balance. Of the remaining 14, 8 of these have balances in the 10% - 30% range. The remaining 6 cards are all around 55% with just 1 card at 66%. ALL 6 of these cards are low or 0% cards with balance transfer balances.

Am I better off concentrating on getting the high balance cards under 30% or should I payoff as many of the smaller (higher interest %) cards as quickly as I can? My goals are improving credit scores which dropped with recent new home build and all that goes with that. I should add that the amount needed to bring all 6 cards under 30% would be more than enough to zero balance the 8 cards already under 30% utilization.

Total balances are just under $20K with available limits totalling $135K. Long term I have the ability to payoff ALL balances in the next 12 - 16 months.

Thanks in advance for any/all input!

1. First I would zero out 2 more of the low balance accounts, so that you have > 50% of your accounts with zero balance.

2. Then I would concentrate on getting the high balance accounts under 30% but doing it evenly across the board, gradually, first getting to just under 50%, then just under 40% then under 30%.

Re: Paydown opinions

Anonymous — Sat, 03 Dec 2016 21:27:34 GMT

Great to hear that you are going to be paying off all of your CC debt in the next 12-16 months.

If your goal is to see a rise in your scores as soon as possible (next four months) then you should follow SouthJ's advice. It's perfect.

Are you planning to use your credit score in any way during the next 12 months? Buy a car, for example?

If not, then it is not important to see your scores go up in the short term. In that case, you may be better served by continuing to follow SJ's advice, but once you have brought each card to under 49%, then just focus on paying off all of your high interest cards. Your score will still go up by getting all your cards under 49%, but then you will start saving money. Indeed, you will achieve your goal of paying off all your cards sooner because you will have paid less interest during that 12 month period.

Re: Paydown opinions

klarso11 — Sat, 03 Dec 2016 21:34:16 GMT

Thanks for the input SouthJamaica! I was actually planning on paying off 3 more cards this month but wasn't sure where to go from there.

Re: Paydown opinions

klarso11 — Sat, 03 Dec 2016 21:36:36 GMT

I like your thinking CreditGuy! No plans for any other major purchase so I will probably do the combination that you and SouthJamaica suggest.

Re: Paydown opinions

SouthJamaica — Sat, 03 Dec 2016 21:58:52 GMT

@klarso11 wrote:
Thanks for the input SouthJamaica! I was actually planning on paying off 3 more cards this month but wasn't sure where to go from there.

Yeah there appears to be a bump for some profiles when they get the percentage of cards with balances below 50%.

Re: Paydown opinions

NRB525 — Sat, 03 Dec 2016 22:41:07 GMT

@klarso11 wrote:
Okay folks, here's the scenario:

I have 26 credit cards, 12 of which have a zero balance. Of the remaining 14, 8 of these have balances in the 10% - 30% range. The remaining 6 cards are all around 55% with just 1 card at 66%. ALL 6 of these cards are low or 0% cards with balance transfer balances.

Am I better off concentrating on getting the high balance cards under 30% or should I payoff as many of the smaller (higher interest %) cards as quickly as I can? My goals are improving credit scores which dropped with recent new home build and all that goes with that. I should add that the amount needed to bring all 6 cards under 30% would be more than enough to zero balance the 8 cards already under 30% utilization.

Total balances are just under $20K with available limits totalling $135K. Long term I have the ability to payoff ALL balances in the next 12 - 16 months.

Thanks in advance for any/all input!

Congrats on the new home, a good use of credit to be sure.

The advice of the others is good, it will help your scores to improve, however I would think that this new impact of mortgage / debt items needs to age or see reduced balance before it will let your scores increase significantly.

And just so we are understanding your reference point of "dropped" and "how to improve", what are your true FICO scores now? What was the change with the new mortgage?

The limits you show, $135k total spread across 26 cards raises the question (as always) of which cards you have, lender and card brand, and what are their limits? The average limit on these cards has to be less than $5k, and there could be some small limits there. There may be options to try to grow those limits, and that may relieve Utilization pressure on your scores.

As to what is possible, each of my scores are just over 800, 24 Revolver CC, with 70% to 75% of those revolvers reporting something, two cards reporting more than 30% each, and about 6% utilization overall. I could probably raise the scores some, but I'd rather keep the cards active until I decide which need to be closed, although that won't be too many that get closed, so I'll probably have a lot of reporting cards for a long time.

Re: Paydown opinions

Anonymous — Tue, 06 Dec 2016 05:10:49 GMT

I didn't no that South Jamacia. I have a little over half my cards reporting and the majority of them with small balances. Now I know how I could potentially get a small bump in score if I paid a few more of them to zero. Thanks for the info.

Re: Paydown opinions

Anonymous — Tue, 06 Dec 2016 05:49:37 GMT

I know I'd pay off the ones that have interest and the highest interest cards get main attention.

Re: Paydown opinions

austinguy907 — Tue, 06 Dec 2016 05:49:41 GMT

Maybe consolidate with Sofi or Lending Club to one single payment? Otherwise start hammering at away at the highest APR and work your way down the ladder and then hit the highest 0% balance that's about to expire and so on.