topic Re: Pay down active or closed CC first? in Credit Cards

Pay down active or closed CC first?

tschaet — Wed, 23 Feb 2022 12:16:25 GMT

I have two active cards where the utilization is around 90% at the moment and has been for a little. I also have one closed NFCU card that is at $13K that I am on a payment plan for. I recently just received a $3.5K bonus (take home) from work. Would it be a better idea to pay off the two active cards completely or throw it towards the much larger NFCU amount?

I'm thinking my active cards. My active ones have a higher interest rate. Credit Karma and other sites seem to only be counting my active cards and not my closed card towards my CC utilization. Whenever I use the simulator, it shows a huge bump for paying off the active ones. Regardless, I'll still be paying the NFCU one down with a payment plan.

Thoughts/advice?

Re: Pay down active or closed CC first?

OmarGB9 — Wed, 23 Feb 2022 12:45:52 GMT

Depending on dollar amounts, I'd take that $3.5k bonus and use it to bring down the two active 90% utilization cards to below 88.9%. The remaining I'd throw at the Navy balance.

Also ignore simulators - they're not accurate at all.

Re: Pay down active or closed CC first?

Brian_Earl_Spilner — Wed, 23 Feb 2022 12:53:53 GMT

Credit Karma uses VantageScore which doesn't count closed cards in scoring. FICO does though. I'd focus on higher APR first if debt payoff is the goal.

Re: Pay down active or closed CC first?

EAJuggalo — Wed, 23 Feb 2022 13:00:12 GMT

Whichever is costing you more money, so whichever has higher interest. FICO absolutely takes into account balances on closed accounts and includes them in utilization. You will not see any real score improvements until you get your total credit card debt to 89% of your open credit card limits.

Are the scores you list in your sig FICO or Vantage? If they are Vantage, don't even list them. Go to www.creditchecktotal.com and pay $1 to find out your actual FICO scores.

Re: Pay down active or closed CC first?

SouthJamaica — Wed, 23 Feb 2022 13:44:27 GMT

@tschaet wrote:
I have two active cards where the utilization is around 90% at the moment and has been for a little. I also have one closed NFCU card that is at $13K that I am on a payment plan for. I recently just received a $3.5K bonus (take home) from work. Would it be a better idea to pay off the two active cards completely or throw it towards the much larger NFCU amount?

I'm thinking my active cards. My active ones have a higher interest rate. Credit Karma and other sites seem to only be counting my active cards and not my closed card towards my CC utilization. Whenever I use the simulator, it shows a huge bump for paying off the active ones. Regardless, I'll still be paying the NFCU one down with a payment plan.

Thoughts/advice?

I would pay off the active ones.

Re: Pay down active or closed CC first?

SouthernCredit — Wed, 23 Feb 2022 13:47:48 GMT

If that 3500 will pay off the active cards completely, start there. Getting rid of those payments will allow you to focus that money on the inactive NFCU card and pay it down quicker, while also not having the other payments to worry about.

Re: Pay down active or closed CC first?

coldfusion — Wed, 23 Feb 2022 15:32:12 GMT

From looking at your signature and what I assume are the credit limits on your 2 currently open cards, you can use that $3.5K bonus to pay both of them off entirely. I would probably do that and apply all of the roughly $575 or so ( (2000+1250) x 90% = $2925) left against your closed NFCU card.

I would also suggest that starting next month you continue with the normal amount you have been paying each month against the NFCU card, but also take the amounts you have been paying each month against your 2 currently open cards and use that money as well to pay against the NFCU card. You'll still be paying the same amount each month in total against your CC debt moving forward but all of it will apply against your closed card.

Re: Pay down active or closed CC first?

OmarGB9 — Wed, 23 Feb 2022 16:49:37 GMT

@coldfusion wrote:
From looking at your signature and what I assume are the credit limits on your 2 currently open cards, you can use that $3.5K bonus to pay both of them off entirely. I would probably do that and apply all of the roughly $575 or so ( (2000+1250) x 90% = $2925) left against your closed NFCU card.

I would also suggest that starting next month you continue with the normal amount you have been paying each month against the NFCU card, but also take the amounts you have been paying each month against your 2 currently open cards and use that money as well to pay against the NFCU card. You'll still be paying the same amount each month in total against your CC debt moving forward but all of it will apply against your closed card.

I hadnt looked at OP's signature. In that case, @tschaet I agree with the above advice. I would also add that you maybe stop using your active cards for a bit, unless you can pay whatever your charge monthly on them back in full every month going forward, and focus on paying down that closed Navy account which is hurting your utilization.

Re: Pay down active or closed CC first?

tschaet — Wed, 23 Feb 2022 23:35:48 GMT

@EAJuggalo wrote:
Whichever is costing you more money, so whichever has higher interest. FICO absolutely takes into account balances on closed accounts and includes them in utilization. You will not see any real score improvements until you get your total credit card debt to 89% of your open credit card limits.
Are the scores you list in your sig FICO or Vantage? If they are Vantage, don't even list them. Go to www.creditchecktotal.com and pay $1 to find out your actual FICO scores.

Thanks! I will check that site out! Yeah, they were from Credit Karma. My discover card lets me check my FICO score and it says 611 and showed this:

Utilization is higher than I thought on my two active. It says total owed is $17180 (this isn't updated to account for recent payments). I just paid $3,209.16, so that leaves $13,970.84 left due. I'm not sure what that would put my utilization at right now. I think $16550 would be my limit, so that's 84.4% utilization?

I paid off the two lower as advised here. They had much higher APRs and the APR on my NFCU is 6% to help me repay.

I have another $1500 bonus coming on Tuesday for a cert I earned, so I will throw it at it too and take it to $12,470.84 remaining as due and 75.4% utilization.

No more bonuses after that. If I applied my other payments towards NFCU that would be $365/month, but I just got a newer job and a 50% increase in salary, so I should be able to increase that to at least $500/month and tackle it more.

I think I knew to go for the higher APR but that NFCU balance seems sooo daunting to me.

Re: Pay down active or closed CC first?

HeavyResist — Wed, 23 Feb 2022 19:45:04 GMT

I have to agree with @OmarGB9 on this one. Good luck to you @tschaet

Re: Pay down active or closed CC first?

coldfusion — Wed, 23 Feb 2022 23:36:52 GMT

@tschaet wrote:
@EAJuggalo wrote:
Whichever is costing you more money, so whichever has higher interest. FICO absolutely takes into account balances on closed accounts and includes them in utilization. You will not see any real score improvements until you get your total credit card debt to 89% of your open credit card limits.
Are the scores you list in your sig FICO or Vantage? If they are Vantage, don't even list them. Go to www.creditchecktotal.com and pay $1 to find out your actual FICO scores.
Thanks! I will check that site out! Yeah, they were from Credit Karma. My discover card lets me check my FICO score and it says 611 and showed this:

Utilization is higher than I thought on my two active. It says total owed is $17180 (this isn't updated to account for recent payments). I just paid $3,209.16, so that leaves $13,970.84 left due. I'm not sure what that would put my utilization at right now. I think $16550 would be my limit, so that's 84.4% utilization?

I paid off the two lower as advised here. They had much higher APRs and the APR on my NFCU is 6% to help me repay.

I have another $1500 bonus coming on Tuesday for a cert I earned, so I will throw it at it too and take it to $12,470.84 remaining as due and 75.4% utilization.

No more bonuses after that. If I applied my other payments towards NFCU that would be $365/month, but I just got a newer job and a 50% increase in salary, so I should be able to increase that to at least $500/month and tackle it more.

I think I knew to go for the higher APR but that NFCU balance seems sooo daunting to me.

Congrats on getting the other 2 cards paid off. This is one of those senarios where you may not see a significant change in your scores right now, but you've lined yourself up for success. Just keep making those payments every month and don't let the balances on your open cards creep up on you.

Your math is close enough for government work. You may see a slight improvement to your scores when the balances on your cards updates with the CRAs, and that will continue over time as your balances continue to drop.