topic Re: Close and Pay Off Cards in Credit Cards

Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 16:48:00 GMT

I'm helping a friend and I need your advice what to do and which cards to close?

He is thinking to close he Discover (Secured) and it'll be paid/closed. He want to cut down on cc. He also said he might want to pay $275 to IKEA and close it and also get rid of Wayfair card too.

This way, he would get rid of 3 cards, but will it hurt his credit and ulitization as well? He showed me his CR, its standing at 70% now.

Any help, will be appreciated.

Re: Close and Pay Off Cards

recoveringfrombk7 — Tue, 25 Feb 2020 16:57:55 GMT

@Anonymous wrote:
I'm helping a friend and I need your advice what to do and which cards to close?

He is thinking to close he Discover (Secured) and it'll be paid/closed. He want to cut down on cc. He also said he might want to pay $275 to IKEA and close it and also get rid of Wayfair card too.

This way, he would get rid of 3 cards, but will it hurt his credit and ulitization as well? He showed me his CR, its standing at 70% now.

Any help, will be appreciated.

Your friend should not close those cards right now. He should consider cutting up those cards if he is concerned he'd use them, but I'm seeing a total utilization of ~70%, and with those removed it will only go up. He should pay the Cap 1 QS, Premier, Target, Discover, IKEA, Amazon, and WM card ASAP to get them below 88.9. Your friend is in the danger zone on many fronts. I strongly advise that he either cut up his cards or give them to a trusted friend to hold onto until he gets things under control. When things are in better shape I'd probably look to close Premier first, assuming it has the sort of predatory fees attached to it that I think it does.

Re: Close and Pay Off Cards

AverageJoesCredit — Tue, 25 Feb 2020 16:58:15 GMT

@Anonymous wrote:
I'm helping a friend and I need your advice what to do and which cards to close?

He is thinking to close he Discover (Secured) and it'll be paid/closed. He want to cut down on cc. He also said he might want to pay $275 to IKEA and close it and also get rid of Wayfair card too.

This way, he would get rid of 3 cards, but will it hurt his credit and ulitization as well? He showed me his CR, its standing at 70% now.

Any help, will be appreciated.

I would not close anything yet being that with such low limits loosing those availble credit limits will hurt his overall utilization. I would first concentrate on paying down as much as these cards down to zero, which will help his score rise.

Re: Close and Pay Off Cards

RSX — Tue, 25 Feb 2020 17:00:07 GMT

I would advise to hold off on the closures until he gets a number of cards under max amount

his priority right now should be attacking the balances on

ikea

amazon

target

discover

wm
premier

If he pays off some, and then closes them, his Util will bounce straight up again

pay everything down to 89%

sock drawer the Wayfair until an AF is coming up. Then close it

stop all spending on CC's right away

I know the limits are low, but these maxed out cards are hurting him

get them all under 29% then think about closing one.

Re: Close and Pay Off Cards

RSX — Tue, 25 Feb 2020 17:01:52 GMT

He should be planning on the Discover converting to Unsecured. How old is it?

i would think that would be the main card he should actually keep long term.

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 17:11:08 GMT

As stated, NO closing right now.

When that time does come, he needs to keep some good cards. Any Visa/MC in the stack (can't tell from the list) and the Discover card should stay. Predatory cards should go.

Re: Close and Pay Off Cards

K-in-Boston — Tue, 25 Feb 2020 17:16:36 GMT

Completely agree with not closing anything until overall utilization is under control. Absolute first priority should be getting ALL cards paid down enough so that no card is reporting higher than 88.9% utilization after new interest charges are added on the following statement and then either start by paying off the lowest balance first and then the next lowest, etc., or applying equal payments to all to bring them down proportionally. Also watch the Amazon account for any looming expiring 0% promo offers as those have retroactive interest if not paid by the agreed date, so while a $500 purchase 6 months ago might only have $20 left on it, it could suddenly be hit with like $65 in retroactive interest.

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 17:19:16 GMT

Thanks for the help. Should I tell him to pay off the Discover and IKEA then pay maybe $75 each on all other accounts esp. the DFS ($127 and things will fall under 88.9% ?

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 17:33:01 GMT

Yep, I would tackle the low limit, high utilization cards first and have them report $0 balance (WM, Discover, IKEA, etc.). When he is left with the larger credit line cards, pay the ones with the highest APR while paying slightly above the minimum on the others, As each card gets paid off, add $ to the next highest APR card, and so forth. Keep adding $ to the next card as each one gets paid off.

Re: Close and Pay Off Cards

recoveringfrombk7 — Tue, 25 Feb 2020 17:37:31 GMT

He should really get the cards maxed/nearly maxed down.

Based on the numbers you posted that means using the money he has available to get these cards down to at least the balance listed below. Lower is better, but this will help the most in the short term.

IKEA 266
Amazon 533
Target 444
Discover 177
WM 133
Cap One 444
Premier 622

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 17:47:08 GMT

The problem is he is on disability beneifts and he gets only $733. Would this work if he pay $100 down on IKEA, WAL MART, DFS and DISCO then the $75 on everything else.

Then next month, he can start getting more balances lower by putting $100 on ALL each of the accounts until $0. He said he will try not to use it at all.

Just sayin ...

Re: Close and Pay Off Cards

RSX — Tue, 25 Feb 2020 17:54:17 GMT

In column E of your sheet, create a % utilization formula

this will make it easier to know which to pay down and by how much

get them all to 89%

then attack the high APR cards while making Minimum+$5 on the rest every month.

Re: Close and Pay Off Cards

SarahJo — Tue, 25 Feb 2020 18:03:34 GMT

@RSX wrote:
In column E of your sheet, create a % utilization formula

this will make it easier to know which to pay down and by how much

get them all to 89%
then attack the high APR cards while making Minimum+$5 on the rest every month.

Yes, I agree with this. It is very important to have the cards that are reporting over 100% UTL to be made current and under 100% UTL ASAP. Once this happens it gives a very clear picture as to whether your friend would like to pay via "avalanche" or "snowball" method (use the forum search function and more info will be given) to reduce and pay off. This is obviously a very limited monthly income, you are saying that $733 is all that is received in a month for living or what is available solely for debt payoff?

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 18:49:50 GMT

@Anonymous wrote:
The problem is he is on disability beneifts and he gets only $733. Would this work if he pay $100 down on IKEA, WAL MART, DFS and DISCO then the $75 on everything else.

Then next month, he can start getting more balances lower by putting $100 on ALL each of the accounts until $0. He said he will try not to use it at all.

Just sayin ...

That changes the game a bit. Not sure what works better, getting to 89% on all cards first or getting 2 or 3 to 0% and then going for 89% on the rest. Might be able to get 2 or 3 cards to 0 faster than all to 89%. Not sure which is best.

Re: Close and Pay Off Cards

RSX — Tue, 25 Feb 2020 20:49:00 GMT

in one month, he can be below 88% on all of them

here is the grid i just worked up for the next months payment - i left some breathing room in case some spend has already happened

After this, we need the Int% for each to see which he should focus on - but i think this is a good step forward

having multiple maxed cards could cause an AA - so i think this is the safest first step, regardless of interest charges

Credit Lender	Balance	Credit Limit	Percentage	Max Amount = 88%	First month - $733	New Amount	New %
IKEA	275	300	91.67%	264	35	240	80.00%
Wayfair	0	500	0.00%	440	0	0	0.00%
AMAZON	580	600	96.67%	528	60	520	86.67%
Target	496	500	99.20%	440	60	436	87.20%
Fingerhut	912	1500	60.80%	1320	60	852	56.80%
Discover	197	200	98.50%	176	35	162	81.00%
WM Card	121	150	80.67%	132	40	81	54.00%
Cap1 QS1	504	500	100.80%	440	75	429	85.80%
Dell DFS	2067	3500	59.06%	3080	140	1927	55.06%
Premier Bank	710	700	101.43%	616	100	610	87.14%
Ginnys	325	450	72.22%	396	40	285	63.33%

Total	6187	8900	78.27%	7832	645	5542	67.00%

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 20:44:42 GMT

@RSX wrote:
in one month, he can be below 88% on all of them

here is the grid i just worked up for the next months payment - i left some breathing room in case some spend has already happened
After this, we need the Int% for each to see which he should focus on - but i think this is a good step forward

having multiple maxed cards could cause an AA - so i think this is the safest first step, regardless of interest charges

Credit Lender Balance Credit Limit Percentage Max Amount = 88% First month - $733
IKEA 275 300 91.67% 264 35
Wayfair 0 500 0.00% 440 0
AMAZON 580 600 96.67% 528 60
Target 496 500 99.20% 440 60
Fingerhut 912 1500 60.80% 1320 60
Discover 197 200 98.50% 176 35
WM Card 121 150 80.67% 132 40
Cap1 QS1 504 500 100.80% 440 75
Dell DFS 2067 3500 59.06% 3080 140
Premier Bank 710 700 101.43% 616 100
Ginnys 325 450 72.22% 396 40

Total 6187 8900 69.52% 645

That would work then. And then get a couple quick hitters (small CLs) down to 0 and then tackle the rest based on APR.

Re: Close and Pay Off Cards

Anonymous — Tue, 25 Feb 2020 21:17:54 GMT

I'm understanding it as this person is on SSI which is only $783 a month right now max? If that's the case, I can understand wanting to close cards.

How much of that income can be put towards debt each month?

Re: Close and Pay Off Cards

Anonymous — Wed, 26 Feb 2020 14:28:12 GMT

Yes, his only income is $733 (SSI) and he said he wants to cut down to maybe 2 cards then close some cards.

By the way, why its better to start at 88.9%? I know its best to reach at or below of 30% and that is his goal then reach to 0%

Thanks guys

Re: Close and Pay Off Cards

AverageJoesCredit — Wed, 26 Feb 2020 15:57:40 GMT

@Anonymous wrote:
Yes, his only income is $733 (SSI) and he said he wants to cut down to maybe 2 cards then close some cards.

By the way, why its better to start at 88.9%? I know its best to reach at or below of 30% and that is his goal then reach to 0%

Thanks guys

Anything over is considered maxed out

Re: Close and Pay Off Cards

SarahJo — Wed, 26 Feb 2020 21:23:43 GMT

I'm sorry if I'm missing something, but if that is the only monthly income aren't there other expenses (i.e. rent, electricity, food, transportation)? I'm just trying to get a clear picture of a realistic monthly budget.