topic Re: Figuring out best card payment plan in Credit Cards

Figuring out best card payment plan

jlpaca — Wed, 24 Feb 2021 03:55:54 GMT

Over the last couple years I racked up a bit of credit debt due to using it to finance something that took too long and just poor spending habits. I was finally able to finish that investment and paid off roughly $70K of credit debt and PIF on 6 cards and the remaining student loans. However I still have a bit left over and some cash that I want to put towards the remaining but not sure whats best. The breakdown is as follows:

card 1: 23K at 14.9%

card 2: 17.8K at 10%

card 3: $3700 at 11.5%

card 4: $3000 at 15%

card 5: $3000 at 11.9%

ploc: $18k at 10%

loan: $32k at 15%

I have about $7k left to put towards this at the moment. My first thought is to knock out the 2 smaller ones left but then I'm also thinking split the larger cards. I also recently joined navy fed. and would like to maybe apply for their platinum card to do a balance transfer and I could also get low interest balance transfer on some of the ones I paid off. Credit is ok, CK says 636. Had one accidental 30 day late 2 months ago but the only one in 7 years.

Any advice would be helpful.

Re: Figuring out best card payment plan

AllZero — Wed, 24 Feb 2021 04:03:49 GMT

@jlpaca wrote:
Had one accidental 30 day late 2 months ago but the only one in 7 years.

Any advice would be helpful.

The recency of the delinquency can pose to be a hurdle for credit seeking. Have your considered sending GW Good Will letters?

I would recommend reading the below from BrutalBodyShots
The Saturation Technique: Best GW adjustment odds.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 04:42:55 GMT

Congrats on paying off $70k in credit card debt. While life and other decisions were not the best getting into the debt, you figured out how to pay a significant amount on your own accord. You should recognize that for its own merits.

In the arena of credit cards those rates are not obscene. Certainly double digit percentage is not ideal but it's not 25%+ either. Without knowing your full financial picture if this remaining 7k truly is "excess and available funds" then pay off Card 3 & 4 and be finished with them. They are comparitvely small amounts, 15% is your highest rate, two less payments to be responsible for, and your rate differences are not truly sizable to merit mathematical differences.

The recent 30 day late from two months ago isn't going to do you any favors and is also a confirmational nod that you need few payments to be accountable for even if you could squeak out a mathematical gain dispersing funds by highest rate first. Next Card Five then Card 1 then card 2. In time as your Navy Fed relationship grows, BT options Chase Slate/Citi's Simplicity ( typically BT oriented cards but you can do the homework if you arent already familiar from your debt payoff efforts) are worth exploring. I see no harm in having a payment focus and let a time pass from that 30 day late, see what 2022 looks like in your scores and reassess. Navy tends to have strong supporters on this forum so their members can chime in on your BT odds, I have no personal experience to share. Good luck

**If you are thin on savings and other cash reserves to handle life, it's not the worst decision to simply hold onto to that 7k. You do have a lot of minimum payments you need to ensure you can meet regardless what comes your way et cetera.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 04:46:18 GMT

@jlpaca wrote:
Credit is ok, CK says 636. Had one accidental 30 day late 2 months ago but the only one in 7 years.

What are your Fico scores? CK does not provide Fico scores, so you can ignore the scores they provide.

If that 30D late is your only negative item, do whatever you can to get it removed. If you don't, it'll be adversely impacting your Fico scores and profile for 7 years.

As far as your debt paydown, zeroing out accounts is a good idea... but also attacking the highest interest account first if finances are your main goal.

Re: Figuring out best card payment plan

thornback — Wed, 24 Feb 2021 05:00:27 GMT

Congrats on your massive paydown so far!

Are you seeking the best paydown method for improving your scores, or the best paydown method for a faster payoff, or a plan to save the most on interest? If you're seeking a plan that offers the best score improvement, then you'd have to provide the credit limits for each card you've listed so we can calculate utilization. Otherwise, please provide an estimate of how much cash you have available to throw at these debts each month.

I would probably use the $7K to knock out cards 4 & 5 just because they're low hanging fruit, sort to speak. Then focus on cards 1 & 3 given their higher interest; then, finally, card 2 and the PLOC. Once that's paid off -- I'd throw everything extra I've got at that 15% loan.

However -- if any of those cards are maxed out or higher than 70% utilization, consider using the $7K to bring them down out of the red (though, depending on the creditor and how long they've been maxed, the creditor may balance chase you anyway leaving you maxed out).

I also recommend getting a hold of your FICO scores if you haven't already, so you know where you stand before applying for a BT card. CK (vantage 3) may be a bit deceiving as it handles debt and utilization differently.

As for Navy -- keep in mind that, while they grow quickly, 1st cards can often start off with low-ish limits for new members - so you may not receive a high enough limit to move as much debt as you'd like.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 05:00:15 GMT

@AllZero makes a good point, that accidental 30 day late is going to really hurt you short term. I think Navy would deny you with how recent that late is. I would check out the thread linked but who is the creditor who you had that 30 day late? It would be worth sharing because someone may be able to suggest further advice on that creditor and maybe help that late go away through goodwill/calling in.

As for my opinion on what to do with your debt I'd take $3000 and wipe out the card at 15%. Now I have $4000. I'm not sure how much you can pay each month moving forward, so I will pretend you'll have $3000 to pay down your debts each month moving forward. What I would do is knock out you're two smaller cards (4 and 5) right now. Then with my last $1000 I would pay down CC#1 to 22k. Why? Because with CC #4 you will eliminate your highest APR. CC#5 will also give you another win and get you feeling good. The snowball effect as Ramsey would call it. Now we only have 3 CC's to worry about. I'm chipping away at 23K until I'm under $13,500 before considering going above minimum on CC#2 or #3 because of it's APR.

Re: Figuring out best card payment plan

jlpaca — Wed, 24 Feb 2021 05:54:47 GMT

To show what the limits are:

card 1: 23K/$27k at 14.9%

card 2: 17.8K/$20k at 10%

card 3: $3700/$10k at 11.5%

card 4: $3000/$5k at 15% - this is a business card

card 5: $3000/$5k at 11.9%

ploc: $18k/$20k at 10%

loan: $32k at 15%

Latest fico I saw was 635 on TU, did the soft apply for the apple card. The $70k paydown I have done, has all been within this last month, and not all balances are reflected on that. I'll have to see what I can do about that late payment becuase its one missed of 937 payments I've made on time in the last 7 years.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 11:45:46 GMT

@thornback Nailed it. You have a couple cards that are maxed out. Get them down before you have consequences from their high usage.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 13:41:21 GMT

@jlpaca wrote:
I'll have to see what I can do about that late payment becuase its one missed of 937 payments I've made on time in the last 7 years.

It sounds like you're looking at Credit Karma for that, as they try to paint a picture that "percentage" of on-time payments matters. It doesn't and isn't a Fico scoring factor. 1 recent late payment against 200 on-time payments vs 500 vs 937 won't make a difference in Fico scoring, as that 1 late payment is going to adversely impact Fico scores the same way.

Re: Figuring out best card payment plan

jlpaca — Wed, 24 Feb 2021 13:54:46 GMT

@Anonymous I understand. More of a talking point I guess I could try to go to the bank about to get them to remove it. It seems knocking the higher ones under 70 percent might be the way to go. I am torn to just knock out the other two ans BT some of that to 0 percent off those cards.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 13:59:29 GMT

Oh yeah, I don't disagree with that at all and think it should definitely be included in a GW letter. I wouldn't talk about percentage or number of on-time payments, just simply state that this is your only blemish on an otherwise extensive positive payment history credit file - which of course they'll be able to see as well.

Re: Figuring out best card payment plan

jlpaca — Wed, 24 Feb 2021 14:14:30 GMT

@Anonymous

Have you had any luck with trying by a phone call first to the reps? It's a smallish credit union that this is associated with.

Re: Figuring out best card payment plan

Anonymous — Wed, 24 Feb 2021 14:20:05 GMT

Not really, 90% of my success came with snail mail letters or emails. I'm also a strong believer in having written records of discussion, something you get with letters but not with phone calls. If you send a letter, you'll get back a letter if you're successful stating that the negative information will be removed from your account. Once you've got that in hand, you're golden and can use that as evidence should the account not be updated appropriately. On the phone someone can tell you what you want to hear and make promises, but you've got no written documentation. If it doesn't happen, you've got no recourse.

Re: Figuring out best card payment plan

jlpaca — Wed, 24 Feb 2021 14:24:40 GMT

@Anonymous of course. 10 years ago I went through the whole repair process and all the letters and disputes and when the CFPB started up and disputes through them.

It seems like the best plan would be to pay off the small balances and use those to BT with any 0 percent offers.