topic Re: Should I pay.....? in Credit Cards

Should I pay.....?

KingJaffeJo — Tue, 12 May 2020 19:35:40 GMT

Noobie question here for the experts.....

My credit score is 673. I have about 3 CO's that will roll off in June of 2021 and my biggest is with AMEX. It's for $7700. I have a current credit card bill of about 8k w/Captital one but I fluctuate on that. Cap 1 CC is always paid on time and I pay more than the minium payments. I currently have about 8k that I could use to either pay off Amex or just add it to my savings. My wife and I are looking to purchase another home in abt two yrs and I'm wondering do I pay off Amex and get their Optima card and stay in their good graces or do I just continue to let it roll off next yr and be done with them. I'm not really pressed to have an amex card since my wife has one. I keep getting these letters from them now asking if I can make a lump sum payment or pay the pennies on a dollar payment from Amex. What would you guys suggest since I only have a little over a yr before these CO's roll off anyway?

Re: Should I pay.....?

Remedios — Tue, 12 May 2020 20:01:14 GMT

Please help me understand something here...you have $8000.00 balance with capital one (with probably astronomical apr), you arent paying in full, but you're wondering if you should use the money to pay old charge off in order to get into Amex's good graces?

If I understand that right, the answer is NO.

Re: Should I pay.....?

Aim_High — Tue, 12 May 2020 20:03:27 GMT

You may get very different answers, but these are my thoughts.

I've never had charge-offs with anybody including AMEX, but from what I've read on My Fico, I believe they have a very long memory. I'm not perfect but I believe in paying my bills if at all possible. During an unexpected major career transition and while trying to support a family of five, I had some huge debts (about 10x what you owe AMEX) that I rolled around over a dozen years between 0% financing offers, refinancing my house, and taking money from long-term savings before I finally paid it off without bankruptcy or charge-offs. I also don't like skeletons lurking in the closet and I sleep better without knowing they could come back to haunt me. So, if it were me, and I could pay off my debt to AMEX, I would probably seriously consider doing it instead of allowing it to charge off. To me, it's not only the principle of the thing but also knowing that anytime in the future I could apply to AMEX or whoever and not be declined for past issues. It just leaves doors open for me.

That said, I know some will tell you take the easy route and just let them drop if you don't mind shutting doors with AMEX.

In the end, it's a very personal decision. Good luck with whatever you decide.

Re: Should I pay.....?

KingJaffeJo — Tue, 12 May 2020 20:04:46 GMT

Well the question is more about does it make sense to clear that AMEX debt with it abt to roll off in a year and some change?

Re: Should I pay.....?

Brian_Earl_Spilner — Tue, 12 May 2020 20:05:34 GMT

@Remedios wrote:
Please help me understand something here...you have $8000.00 balance with capital one (with probably astronomical apr), you arent paying in full, but you're wondering if you should use the money to pay old charge off in order to get into Amex's good graces?

If I understand that right, the answer is NO.

But, it's amex.

Re: Should I pay.....?

Brian_Earl_Spilner — Tue, 12 May 2020 20:08:12 GMT

Personally, I'd pay off the Cap1 and if you want to get back in Amex's good graces, take the payments from cap1 and set up a payment plan with amex.

If there any possibility that you want to get back in with them within the next 10-20 years, pay them, because that'll be about how long you'll be blacklisted.

Re: Should I pay.....?

Aim_High — Tue, 12 May 2020 20:08:40 GMT

@Remedios wrote:
Please help me understand something here...you have $8000.00 balance with capital one (with probably astronomical apr), you arent paying in full, but you're wondering if you should use the money to pay old charge off in order to get into Amex's good graces?

If I understand that right, the answer is NO.

To clarify since you responded at the same time I did, Remi, my answer took into account that OP said he was paying Capital One on time. Although it doesn't make good financial sense to add that much to savings while carrying a balance (unless it's a 0% offer,) as long as he is still paying on time to Capital One it seemed to me that paying off the old debt to AMEX would be worthwhile. That is, (IF) he were ever going to pay it instead of letting it charge off.

Re: Should I pay.....?

Remedios — Tue, 12 May 2020 20:10:02 GMT

@Aim_High wrote:
You may get very different answers, but these are my thoughts.

I've never had charge-offs with anybody including AMEX, but from what I've read on My Fico, I believe they have a very long memory. I'm not perfect but I believe in paying my bills if at all possible. During an unexpected major career transition and while trying to support a family of five, I had some huge debts (about 10x what you owe AMEX) that I rolled around over a dozen years between 0% financing offers, refinancing my house, and taking money from long-term savings before I finally paid it off without bankruptcy or charge-offs. I also don't like skeletons lurking in the closet and I sleep better without knowing they could come back to haunt me. So, if it were me, and I could pay off my debt to AMEX, I would probably seriously consider doing it instead of allowing it to charge off. To me, it's not only the principle of the thing but also knowing that anytime in the future I could apply to AMEX or whoever and not be declined for past issues. It just leaves doors open for me.

That said, I know some will tell you take the easy route and just let them drop if you don't mind shutting doors with AMEX.

In the end, it's a very personal decision. Good luck with whatever you decide.

@Aim_High it's been charged of for years.

The question here is whether to pay off card that has $8000.00 balance (knowing cap one, huge apr to go with it), or pay an old charge off in exchange for another Amex card.

I dont even see the choice there.

Re: Should I pay.....?

Remedios — Tue, 12 May 2020 20:13:57 GMT

@Aim_High wrote:
@Remedios wrote:
Please help me understand something here...you have $8000.00 balance with capital one (with probably astronomical apr), you arent paying in full, but you're wondering if you should use the money to pay old charge off in order to get into Amex's good graces?

If I understand that right, the answer is NO.
To clarify since you responded at the same time I did, Remi, my answer took into account that OP said he was paying Capital One on time. Although it doesn't make good financial sense to add that much to savings while carrying a balance (unless it's a 0% offer,) as long as he is still paying on time to Capital One it seemed to me that paying off the old debt to AMEX would be worthwhile. That is, (IF) he were ever going to pay it instead of letting it charge off.

OP stated they are paying "more than minimum " which is typically a code word for paying a little over.

What's a $200 payment on $8000.00 balance when interest is over 20%

Meanwhile, amount of CO is frozen, and can be paid off later.

I really cannot see how spending 8000.00 to buy Amex's love while bleeding money is sound financial call.

Re: Should I pay.....?

KingJaffeJo — Tue, 12 May 2020 20:13:57 GMT

My goal is to increase my credit score. Keeping the money and just letting it roll off next year seams easy. But if my score will increase drastically if I pay them off now then that sounds better. But Im not 100% sure thats even the case. Does anyone know that? Not trying to pay them off now and just get a 10-15 pt increase. I can get that by paying off half of the cap 1 bill now.

Re: Should I pay.....?

Anonymous — Tue, 12 May 2020 20:19:06 GMT

I have to agree with Remedios here. I'd pay off the Cap One since that is doing immediate financial harm in the form of continuous interest and accept that I probably wasn't getting back in with Amex.

In an absolute vaccum you pay them both and get in with Amex again too, but since the option is one or the other, I'd pick paying off the Cap One since it has continuing implications.

Re: Should I pay.....?

Brian_Earl_Spilner — Tue, 12 May 2020 20:25:29 GMT

@KingJaffeJo wrote:
My goal is to increase my credit score. Keeping the money and just letting it roll off next year seams easy. But if my score will increase drastically if I pay them off now then that sounds better. But Im not 100% sure thats even the case. Does anyone know that? Not trying to pay them off now and just get a 10-15 pt increase. I can get that by paying off half of the cap 1 bill now.

The fastest way to increase your score is utilization. Depending on your cap1 limit, and aggregate utilization, you could easily gain that by paying it off.

EDIT: just re-read and it said you wanted more than that. Don't know status of your utilization, but the premise still stands

Re: Should I pay.....?

seattletravels — Tue, 12 May 2020 20:24:20 GMT

100% agree with Remy. Pay off the Capital One.

Re: Should I pay.....?

Aim_High — Tue, 12 May 2020 21:00:47 GMT

@Remedios wrote:
@Aim_High it's been charged of for years.
The question here is whether to pay off card that has $8000.00 balance (knowing cap one, huge apr to go with it), or pay an old charge off in exchange for another Amex card. I dont even see the choice there.

I see your point. I took it as more about whether he should ever pay the charge off or not, as it sounded as he had no plans to settle up if it dropped off. Given that it's been charged off a long time, maybe paying it should take a back seat to the current debt, even though he is "on-time" and paying above minimum with Capital One. Regardless, I would still pay AMEX at some point if it's possible, but that's just me.

Some may have a different experience but I've not found Capital One to be predatory in the least. Actually, they were one of the lenders who gave me BT offers during those dark days I mentioned and my APR has always been lower on that card than with some of the other major banks like Chase, Bank of America, and Citi. (My current APR is 11.90% on my Quicksilver, not bad at all for a rewards card APR, and it's never been above about 14% IIRC, and that was when my credit scores were much lower.) As we speak, I've got a BT offer with them. So we also don't know if those are new charges with OP or if that is some of the old debt he is paying down on a BT offer. He didn't specify.

Re: Should I pay.....?

Remedios — Tue, 12 May 2020 20:36:17 GMT

@Aim_High wrote:
@Remedios wrote:
@Aim_High it's been charged of for years.
The question here is whether to pay off card that has $8000.00 balance (knowing cap one, huge apr to go with it), or pay an old charge off in exchange for another Amex card. I dont even see the choice there.
I see your point. I took it as more about whether he should ever pay the charge off or not, as it sounded as he had no plans to settle up if it dropped off. Given that it's been charged off a long time, maybe paying it should take a back seat to the current debt, even though he is "on-time" and paying above minimum with Capital One. Regardless, I would still pay AMEX at some point if it's possible, but that's just me.

Some may have a different experience but I've not found Capital One to be predatory in the least. Actually, they were one of the lenders who gave me BT offers during those dark days I mentioned and my APR has always been lower on that card than with some of the other major banks like Chase, Bank of America, and Citi. (My current APR is 11.90% on my Quicksilver, not bad at all for a rewards card APR, and it's never been above about 14% IIRC, and that was when my credit scores were much lower.) As we speak, I've got a BT offer with them. So we also don't know if those are new charges with OP or if that is some of the old debt he is paying down on a BT offer. He didn't specify.

Who said anything about capital one being predatory?

Okay let me break it down differently..

OP has had credit issues in the past. OP has Capital One card, which wasn't obtained as a "prime" customer.

The interest on it is not low, in fact its probably eating most of their payments.

Balance on it is not a result of BT. OP didnt specify, but I've been around long enough.

Anyway, if person is paying more than a thousand of dollars in interest on just one card (and it's not the only card they are paying interest on), then dumping money merely to get Amex for show and tell is ridiculous idea.

Amex would take their money 10 years from now, they dont exactly forget, but Capital One and other cards with balances are the issue here, not wishful thinking on OPs part that new card will help them build score.

Re: Should I pay.....?

Aim_High — Tue, 12 May 2020 20:37:41 GMT

@Remedios wrote:
OP stated they are paying "more than minimum " which is typically a code word for paying a little over.
What's a $200 payment on $8000.00 balance when interest is over 20%
Meanwhile, amount of CO is frozen, and can be paid off later.
I really cannot see how spending 8000.00 to buy Amex's love while bleeding money is sound financial call.

@Anonymous wrote:
I have to agree with Remedios here. I'd pay off the Cap One since that is doing immediate financial harm in the form of continuous interest and accept that I probably wasn't getting back in with Amex.

In an absolute vaccum you pay them both and get in with Amex again too, but since the option is one or the other, I'd pick paying off the Cap One since it has continuing implications.

@seattletravels wrote:
100% agree with Remy. Pay off the Capital One.

I agree that paying off the Capital One (first) is a smarter proposition. However, that wasn't OP's question. OP wasn't even looking at paying off the Capital One debt (or) the AMEX debt. OP was asking if he should put the $8K into savings (or) pay off AMEX. So that was the question I answered. Plus the thread title "Should I pay ..." sounded to me like he was asking if he should pay the charge off debt, period.

"... I currently have about 8k that I could use to either pay off Amex or just add it to my savings."

But yes, probably better still to pay off Capital One (assuming it's not a 0% BT offer, which it could be), then later pay off AMEX charge offs. He can probably afford to do both, especially since he is looking into purchasing a house.

Re: Should I pay.....?

seattletravels — Tue, 12 May 2020 20:42:41 GMT

@KingJaffeJo wrote:
My goal is to increase my credit score. Keeping the money and just letting it roll off next year seams easy. But if my score will increase drastically if I pay them off now then that sounds better. But Im not 100% sure thats even the case. Does anyone know that? Not trying to pay them off now and just get a 10-15 pt increase. I can get that by paying off half of the cap 1 bill now.

@Aim_High I take your point. I was mostly half reading the thread but I see now your position. I saw OP say they can get a bump by paying half the cap one bill now - was just saying they should pay off the whole thing. Interest must be insane.

Agree that they should settle their debts with Amex eventually.

Re: Should I pay.....?

Remedios — Tue, 12 May 2020 20:50:08 GMT

Finances over scoring. Till that lesson is learned, nothing is learned.

Anyway, good luck OP however you decide to proceed.

Re: Should I pay.....?

Aim_High — Tue, 12 May 2020 21:04:17 GMT

@Remedios wrote:
@Aim_High wrote:
@Remedios wrote:
@Aim_High it's been charged of for years.
The question here is whether to pay off card that has $8000.00 balance (knowing cap one, huge apr to go with it), or pay an old charge off in exchange for another Amex card. I dont even see the choice there.
I see your point. I took it as more about whether he should ever pay the charge off or not, as it sounded as he had no plans to settle up if it dropped off. Given that it's been charged off a long time, maybe paying it should take a back seat to the current debt, even though he is "on-time" and paying above minimum with Capital One. Regardless, I would still pay AMEX at some point if it's possible, but that's just me.

Some may have a different experience but I've not found Capital One to be predatory in the least. Actually, they were one of the lenders who gave me BT offers during those dark days I mentioned and my APR has always been lower on that card than with some of the other major banks like Chase, Bank of America, and Citi. (My current APR is 11.90% on my Quicksilver, not bad at all for a rewards card APR, and it's never been above about 14% IIRC, and that was when my credit scores were much lower.) As we speak, I've got a BT offer with them. So we also don't know if those are new charges with OP or if that is some of the old debt he is paying down on a BT offer. He didn't specify.

Who said anything about capital one being predatory?
Okay let me break it down differently..

OP has had credit issues in the past. OP has Capital One card, which wasn't obtained as a "prime" customer.
The interest on it is not low, in fact its probably eating most of their payments.
Balance on it is not a result of BT. OP didnt specify, but I've been around long enough.

Anyway, if person is paying more than a thousand of dollars in interest on just one card (and it's not the only card they are paying interest on), then dumping money merely to get Amex for show and tell is ridiculous idea.

Amex would take their money 10 years from now, they dont exactly forget, but Capital One and other cards with balances are the issue here, not wishful thinking on OPs part that new card will help them build score.

Remi, as I just posted, I agree with your advice that paying off Capital One is probably a higher priority, although that isn't what he asked.

Who said anything about capital one being predatory?

I took the comment "knowing cap one, huge apr to go with it" as implying a predatory-type card or lender.

OP has had credit issues in the past.

Agreed, OP admitted to charge-offs.

OP has Capital One card, which wasn't obtained as a "prime" customer.

Actually, we do not know that. My credit was excellent (high 700's) before I went through that unexpected career change that led me into debt. Sometimes people go through a tough divorce or a career interruption or have a medical crisis. Just because someone had credit problems and has a Capital One card doesn't mean they were always a 'subprime' customer.

The interest on it is not low, in fact its probably eating most of their payments.

It could be. It could not be. OP didn't specify WHICH Capital One card he had. Some do charge high interest. The advertised rate for a Capital One Quicksilver ONE is 26.99% with a $39 AF. But my Capital One Quicksilver is 11.90% with no AF, and has been similar even when my credit scores were much lower.

Balance on it is not a result of BT. OP didnt specify, but I've been around long enough.

I agree that's a logical assumption, but we don't actually know. Maybe I was not so quick to assume that because my Capital One relationship has been overall very fair and beneficial. With my 0% BT offers and reasonable APRs, I never assumed OP was paying thousands in interest. Just a different viewpoint from my different experiences.

Re: Should I pay.....?

Anonymous — Tue, 12 May 2020 20:58:19 GMT

Focussing just on the "should I pay off Amex" without discussing what else the money should be used for, there are two usual arguments for doing so.

1) You need to if you eventually want a card. This is strictly utilitarian, how much is having an Amex worth. For me at least, $7K+ is way too much value, lots of competitor cards out there and $7K is too much to pay to play for the chance of getting back in (even if the chance is quite high)

2) Moral thing to do. Well, I have heard of morals, but never been troubled by them. The issuer gave the card knowing the rules of the game, and their business case allows for a certain amount to go bad while making a nice profit overall. So, if you can't sleep at night because you feel the obligation to pay, well, see a sleep doctor!