topic Re: Credit Card Paydown Strategy in Credit Cards

Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 13:46:41 GMT

I was just wondering when everybody here carries a balance, do you not use the card or keep using it? I used to PIF but recently I purchased some stuff with 0% interest as well as did a couple BT's as to not pay 29.99% interest to Wells Fargo for furniture. I also like having just one or two card payments a month. I guess I find myself using my cards for everyday stuff as well (gas, groceries, food, etc) and it feels like everytime I make a nice payment $300+ it just fills back up again.

I guess my question is should I forfeit some of my rewards for awhile until I'm down at an amount I can PIF again? Obviously having a balance and paying interest is eating into if not completely wiping out any rewards....

Any thoughts or strategies you use?

Re: Credit Card Paydown Strategy

GoodCredBen — Fri, 30 May 2014 13:50:39 GMT

I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 14:00:21 GMT

@GoodCredBen wrote:
I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.

I did think about BT'ing all my balances on to my Discover at 0% interest for 12 months, that way I could also send large payments a couple times a month to that one card. Problem is if I BT my other balances my card will be at like 93% UTIL...that doesnt look good at all.

Re: Credit Card Paydown Strategy

GoodCredBen — Fri, 30 May 2014 14:03:32 GMT

well thats exactly what i am doing... it doesnt look good for a short while, you are correct... but when apping for anothing card they are going to look at your overall credit util, not just for that one card.....

to be honest, discover is going to look and see you are using good on their card, and maybe even give a CLI

Re: Credit Card Paydown Strategy

Miscellamy — Fri, 30 May 2014 14:06:57 GMT

I personally think that, unless you need to apply for more credit soon, you're better off taking the util. hit on the Discover card so you're not paying interest. (Although, maybe it would be worth calling Discover and asking for a CLI in light of a balance you'd like to transfer? Hopefully someone else will chime in b/c I have no idea whether that's a) wise or b) likely. But it's a thought).

I recently did this as well. I generally pif every month. But I recently had a whole raft of unexpected expenses that ran my balance higher than I could pif. I took advantage of a 0% BT offer, moved it over, and am paying enough each month to get rid of the balance within the promo period.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 14:08:24 GMT

@GoodCredBen wrote:
well thats exactly what i am doing... it doesnt look good for a short while, you are correct... but when apping for anothing card they are going to look at your overall credit util, not just for that one card.....

to be honest, discover is going to look and see you are using good on their card, and maybe even give a CLI

Oh sure now you tempt me with possible CLI's as well Maybe I'll just do the BT, probably be able to get a large enough payment sent in that it wont even report the full balance to the CRA's. Thanks for the input GoodCred!

Re: Credit Card Paydown Strategy

GoodCredBen — Fri, 30 May 2014 14:09:43 GMT

Exactly what i am doing, if they give you the 0% then why not.... i get 0% for 18 months on BT ... so i am going to use it lol.... I think as long as you havent had a recent CLI with discover, and you havent had anything tragic happen with your credit, they may want to do a hard pull, but you would probably get a CLI.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 14:11:28 GMT

@Miscellamy wrote:
I personally think that, unless you need to apply for more credit soon, you're better off taking the util. hit on the Discover card so you're not paying interest. (Although, maybe it would be worth calling Discover and asking for a CLI in light of a balance you'd like to transfer? Hopefully someone else will chime in b/c I have no idea whether that's a) wise or b) likely. But it's a thought).

I recently did this as well. I generally pif every month. But I recently had a whole raft of unexpected expenses that ran my balance higher than I could pif. I took advantage of a 0% BT offer, moved it over, and am paying enough each month to get rid of the balance within the promo period.

I actually just did a CLI with Discover because of a table my DG and I purchased at Ashley, Wells Fargo financed it but the 29.99% was just dumb (60 days 0% on a $1200 table really?) Anyway that was my DG card so I put it on my Discover. I wont be needing credit anytime soon so maybe the high util and $0 balance on my other 5 cards wont be so bad. I really cant beat the Discover BT at 0% for 12 months (there is a 3% BT fee but oh well).

Thanks for your ideas!

Re: Credit Card Paydown Strategy

Creditaddict — Fri, 30 May 2014 14:51:10 GMT

I think having 1 card at 90%+ util. and having remaining cards at $0 or maybe 1 other one for your monthly spending and PIf and all others reporting $0 is WAY better for credit score then say having 5 accounts all report balances even if they are under 20%.

I have always seen Fico scoring harder on more accounts with balances then 1 account with high util.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 14:56:31 GMT

@Creditaddict wrote:
I think having 1 card at 90%+ util. and having remaining cards at $0 or maybe 1 other one for your monthly spending and PIf and all others reporting $0 is WAY better for credit score then say having 5 accounts all report balances even if they are under 20%.
I have always seen Fico scoring harder on more accounts with balances then 1 account with high util.

Thanks Creditaddict, currently I have 4 cards reporting a balance my total util is 16% across all accounts. If I BT those over to my Discover card, I'd have the 1 card reporting right around 98% UTIL. I would however be sending $400-$500 as soon as the BT went through, so that would dent that balance a bit. You dont think that would be bad for FICO scoring or Discover for that matter? I really dont want them thinking whoa this guy just went up to 98% util...shut him down

Re: Credit Card Paydown Strategy

Anonymous — Fri, 30 May 2014 14:57:51 GMT

@PlasticOrPlastic wrote:
@GoodCredBen wrote:
I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.
I did think about BT'ing all my balances on to my Discover at 0% interest for 12 months, that way I could also send large payments a couple times a month to that one card. Problem is if I BT my other balances my card will be at like 93% UTIL...that doesnt look good at all.

This 100%. It will look bad for a while, but it will help you pay down the balances much faster considering you are not throwing money away at interest. I had to carry a little bit of a balance to finish paying off my college because I could not get another loan at the time. I put it on a card I had. App'd for a new card with 0% BT for 18 months, and was able to pay it off within the promo period because I wasn't paying a dime towards interest.

How long have you had the Discover? I don't have one myself so I don't know if they auto CLI, but if they don't, it is definitely worth a shot at requesting a CLI now before the balance transfer as that will certainly help with the utilization.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 15:01:00 GMT

@Anonymous wrote:
@PlasticOrPlastic wrote:
@GoodCredBen wrote:
I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.
I did think about BT'ing all my balances on to my Discover at 0% interest for 12 months, that way I could also send large payments a couple times a month to that one card. Problem is if I BT my other balances my card will be at like 93% UTIL...that doesnt look good at all.
This 100%. It will look bad for a while, but it will help you pay down the balances much faster considering you are not throwing money away at interest. I had to carry a little bit of a balance to finish paying off my college because I could not get another loan at the time. I put it on a card I had. App'd for a new card with 0% BT for 18 months, and was able to pay it off within the promo period because I wasn't paying a dime towards interest.

How long have you had the Discover? I don't have one myself so I don't know if they auto CLI, but if they don't, it is definitely worth a shot at requesting a CLI now before the balance transfer as that will certainly help with the utilization.

I've only had the card 3.5 months. I started at $800 CL and took a HP to go to $2000 at 3 months, last week or the week before I did another HP which took me to $3000...wishing I would have asked for more but didnt want to push my luck.

Re: Credit Card Paydown Strategy

Bman70 — Fri, 30 May 2014 18:49:08 GMT

I usually keep using it even when I have a balance. However, I also pay zero interest. For instance, if I have a New Balance of $750, with a due date of June 23rd.. I'll charge around $800 of daily expenses from now until June 23. Concurrently I'll pay several lump payments.. say $250, $300, $150, and $50. So by the time 6/23 comes around, I've paid equal to $750, avoiding interest, yet having a balance of $800.

Of course, I could just pay $750 in one lump, zeroing it out, then charge $800 in new charges. But I find it easier to pay as I go along. It certainly doesn't matter if your card "fills back up again," as long as you're paying no interest.

Re: Credit Card Paydown Strategy

Anonymous — Fri, 30 May 2014 19:05:50 GMT

@PlasticOrPlastic wrote:
@Anonymous wrote:
@PlasticOrPlastic wrote:
@GoodCredBen wrote:
I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.
I did think about BT'ing all my balances on to my Discover at 0% interest for 12 months, that way I could also send large payments a couple times a month to that one card. Problem is if I BT my other balances my card will be at like 93% UTIL...that doesnt look good at all.
This 100%. It will look bad for a while, but it will help you pay down the balances much faster considering you are not throwing money away at interest. I had to carry a little bit of a balance to finish paying off my college because I could not get another loan at the time. I put it on a card I had. App'd for a new card with 0% BT for 18 months, and was able to pay it off within the promo period because I wasn't paying a dime towards interest.

How long have you had the Discover? I don't have one myself so I don't know if they auto CLI, but if they don't, it is definitely worth a shot at requesting a CLI now before the balance transfer as that will certainly help with the utilization.
I've only had the card 3.5 months. I started at $800 CL and took a HP to go to $2000 at 3 months, last week or the week before I did another HP which took me to $3000...wishing I would have asked for more but didnt want to push my luck.

I would say do the balance transfer. I think Discover auto CLI's anyway from what my brother told me about the card now that I think of a discussion we had. After about 6 months, you will hopefully be more than halfway to paying down your debt. In a year, you will be debt free. They may issue an auto CLI with the balance and they see you aggressively paying it down. But, to me, it just doesn't make sense to justify throwing money away just to keep a higher score now. Getting the debt cleared will give you the freedom to app for better cards down the road. Your score will grow with your AAoA growing and you decreasing your DTI.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 19:14:15 GMT

@Anonymous wrote:
@PlasticOrPlastic wrote:
@Anonymous wrote:
@PlasticOrPlastic wrote:
@GoodCredBen wrote:
I carry a relatively high balance with my overall credit limits, but as of today, all of my balances will be on one card, and i will be making a hefty payment to that card rather then fighting 3 different lenders to pay down some high APR (29.99% on one of them) ....

i find it is easier to have one central location to then chop it down from there.... all the other cards, will have 0 balance.

Since you only need one card reporting a minimal balance for scoring purposes, it will help a ton.
I did think about BT'ing all my balances on to my Discover at 0% interest for 12 months, that way I could also send large payments a couple times a month to that one card. Problem is if I BT my other balances my card will be at like 93% UTIL...that doesnt look good at all.
This 100%. It will look bad for a while, but it will help you pay down the balances much faster considering you are not throwing money away at interest. I had to carry a little bit of a balance to finish paying off my college because I could not get another loan at the time. I put it on a card I had. App'd for a new card with 0% BT for 18 months, and was able to pay it off within the promo period because I wasn't paying a dime towards interest.

How long have you had the Discover? I don't have one myself so I don't know if they auto CLI, but if they don't, it is definitely worth a shot at requesting a CLI now before the balance transfer as that will certainly help with the utilization.
I've only had the card 3.5 months. I started at $800 CL and took a HP to go to $2000 at 3 months, last week or the week before I did another HP which took me to $3000...wishing I would have asked for more but didnt want to push my luck.
I would say do the balance transfer. I think Discover auto CLI's anyway from what my brother told me about the card now that I think of a discussion we had. After about 6 months, you will hopefully be more than halfway to paying down your debt. In a year, you will be debt free. They may issue an auto CLI with the balance and they see you aggressively paying it down. But, to me, it just doesn't make sense to justify throwing money away just to keep a higher score now. Getting the debt cleared will give you the freedom to app for better cards down the road. Your score will grow with your AAoA growing and you decreasing your DTI.

Very true, I called Discover and they would be glad to check on another CLI...but its a hard pull...which puts me at 22 HP's on TU so I'm gonna skip that one do the BT's and send a $500 payment next week sometime. Hopefully I dont scare them into AA or balance chasing on my Discover IT.

Re: Credit Card Paydown Strategy

GoodCredBen — Fri, 30 May 2014 19:28:58 GMT

I doubt it, this isnt uncommon i can guarantee you that....

Re: Credit Card Paydown Strategy

Anonymous — Fri, 30 May 2014 19:29:09 GMT

I did a BT with my Citi Card immediately when I got it. I used another card to pay my college tuition and transferred the balance to the Citi Card to avoid interest fees. The transfer was nearly 90% of the credit line at the time of the balance transfer. I think they expect you to use the credit line or they wouldn't offer you the BT offer. In fact, now that I have the card (tuition) paid down to 10%, I called for a CLI today and they were able to bump the limit from 6,500 to 15,000.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 19:49:20 GMT

@Anonymous wrote:
I did a BT with my Citi Card immediately when I got it. I used another card to pay my college tuition and transferred the balance to the Citi Card to avoid interest fees. The transfer was nearly 90% of the credit line at the time of the balance transfer. I think they expect you to use the credit line or they wouldn't offer you the BT offer. In fact, now that I have the card (tuition) paid down to 10%, I called for a CLI today and they were able to bump the limit from 6,500 to 15,000.

Well that is awesome! What a CLI congrats on that!! Hopefully I have the same luck with Discover... I just updated my spreadsheet that tracks all my cards (it turned very red) it shows 7 cards with $0 balance and my Discover with 98.9% (forgot about the balance transfer fee). Scary looking but hopefully I can take care of it quicker this way and be done with it. Thanks for all the replies!

Re: Credit Card Paydown Strategy

Revelate — Fri, 30 May 2014 20:08:44 GMT

@Creditaddict wrote:
I think having 1 card at 90%+ util. and having remaining cards at $0 or maybe 1 other one for your monthly spending and PIf and all others reporting $0 is WAY better for credit score then say having 5 accounts all report balances even if they are under 20%.
I have always seen Fico scoring harder on more accounts with balances then 1 account with high util.

Depends what credit strata you're in but generally I agree with this: it's especially true if you have otherwise solid credit.

Agree with everyone else, do the BT that makes financial sense.

Maxxing out a single tradeline isn't a the big bugaboo that everyone makes it out to be (except maybe for Penfed): yes, it'll be a temporary FICO ding, but if you're paying down the debt nobody is going to care. It's when there's a pattern of high utilization on tradelines and just the minimum payment is being made (which they can see FYI on a AR pull) where lenders get skittish typically and may balance chase you or other AA. Discover won't since they know exactly why you have the maxxed out line (BT baby!) and the rest won't blink unless you don't make payments.

Re: Credit Card Paydown Strategy

PlasticOrPlastic — Fri, 30 May 2014 20:46:43 GMT

@Revelate wrote:
@Creditaddict wrote:
I think having 1 card at 90%+ util. and having remaining cards at $0 or maybe 1 other one for your monthly spending and PIf and all others reporting $0 is WAY better for credit score then say having 5 accounts all report balances even if they are under 20%.
I have always seen Fico scoring harder on more accounts with balances then 1 account with high util.
Depends what credit strata you're in but generally I agree with this: it's especially true if you have otherwise solid credit.

Agree with everyone else, do the BT that makes financial sense.

Maxxing out a single tradeline isn't a the big bugaboo that everyone makes it out to be (except maybe for Penfed): yes, it'll be a temporary FICO ding, but if you're paying down the debt nobody is going to care. It's when there's a pattern of high utilization on tradelines and just the minimum payment is being made (which they can see FYI on a AR pull) where lenders get skittish typically and may balance chase you or other AA. Discover won't since they know exactly why you have the maxxed out line (BT baby!) and the rest won't blink unless you don't make payments.

Good to read Revelate, espeically since I just transferred all my balances to my IT card. Luckily were only talking 2960 bucks (all my debt) not like its tens of thousands. One payment should be very nice though! And fortunatly Ill probably have this paid off in 3-4 months anyway! Thanks for the post Revelate.