topic Re: which credit cards do i pay off first? in General Credit Topics

which credit cards do i pay off first?

Anonymous — Tue, 10 Mar 2015 17:45:41 GMT

I have about $4000 that i would like to use towards paying my credit cards, but many of them have the same APR (18%-22% with the exception of chase slate & conns which is 0%) so i cant go based off of APR.My score took a big plunge after i bought a house, refinanced my car, then opened up a bunch of credit card accounts!

cap1 quiksilver 2800/3000

cap 1 platinum 2165/2250

cap 1 (not sure which card) 276/710

walmart 778/1200

rooms to go 390/1500 (limit was recently reduced from 4000)

conns 2890/3500

home depot 880/1500

tjx 2631/2750

macys 70/600

dillards 1332/5800

target 660/700

chase freedom 158/200

chase slate 420/500

babies r us 2038/3000

kohls 692/800

EQ 607 TU 627 EX 621

GOAL 680-710 be end of the year

Thanks!

Re: which credit cards do i pay off first?

Pway — Tue, 10 Mar 2015 17:51:52 GMT

@Anonymous wrote:
I have about $4000 that i would like to use towards paying my credit cards, but many of them have the same APR (18%-22% with the exception of chase slate & conns which is 0%) so i cant go based off of APR.My score took a big plunge after i bought a house, refinanced my car, then opened up a bunch of credit card accounts!

cap1 quiksilver 2800/3000
cap 1 platinum 2165/2250
cap 1 (not sure which card) 276/710 PAY OFF
walmart 778/1200 PAY OFF
rooms to go 390/1500 (limit was recently reduced from 4000) PAY OFF
conns 2890/3500
home depot 880/1500 PAY OFF
tjx 2631/2750
macys 70/600 PAY OFF
dillards 1332/5800
target 660/700 PAY OFF
chase freedom 158/200 PAY OFF
chase slate 420/500 PAY OFF
babies r us 2038/3000
kohls 692/800 PAY OFF

EQ 607 TU 627 EX 621
GOAL 680-710 be end of the year

Thanks!
* I would pay off all the low balances first and then choose one card at a time to pay off.

Re: which credit cards do i pay off first?

Anonymous — Tue, 10 Mar 2015 18:19:38 GMT

Thank you!

And I also have a sams club MasterCard 2800/3500

Re: which credit cards do i pay off first?

CH-7-Mission-Accomplished — Tue, 10 Mar 2015 18:32:10 GMT

Hey OP,

I agree with paying off the low balance accounts so you have fewer cards with balances.

You also need to calculate 90% of each individual card and get each indiviudal card under 90%. Being at over 90% on any one card is killing your FICO scores.

Now no judgment here, because I've done this myself, but you my friend are a credit abuser. If you don't learn from this mess and promise yourself never to do it again, you will wind up bankrupt -- maybe even twice like I have been. This is how it starts off.

You would do well to get these things paid off and close all but three major bank cards. If you are running up retail cards you probably have a spending problem for things you likely don't need. You can buy stuff at Value Village.

Just want to help you avoid my mistakes. You of couse will make your own decisions and follow your own path.

Re: which credit cards do i pay off first?

Anonymous — Tue, 10 Mar 2015 19:13:08 GMT

There are several different schools of thought on how to pay off the cards. The most efficient way is generally to pay off the highest interest card first and move down the list based on APR. However, for some, the motivation of feeling like they achieve something is important and paying lower balances first can help you achieve that. Moreover, when balances are low on cards and the minimum payment is at the floor for the card (often $25), paying off the card could lower your overall minimum payment across all cards more so than paying off a higher balance card. However, in general, paying off the highest interest card first will save you more money.

Ask yourself these two questions:

1. Is saved money more important or is short-term FICO scores due to utilization more important?

2. Is saved money more important or is the motivational benefit of feeling like you are achieving something more important? If you need the motivation to keep at it, then motivation is definitely the most important factor since people who lose motivation can fall back to bad habits.

For me, the answer would almost always be the former (i.e. pay highest APR card first). If I were in CC debt, my priority would be to get out of debt as fast as possible as long as I had the cash flow to make the payments. Paying the highest interest card will get me out of debt faster than any of other method. With that said, consider your own personality and needs before making a decision. For some people, the mathematically optimal method of making payments is not the optimal method because any plan a person fails to stick to is worse than a plan they can stick to.

For the cards with identical APRs, pay down the one with the lowest balance first or the one with highest utilization first. The former will give you motivation and the latter will help your score more. Pick what works best for you

Re: which credit cards do i pay off first?

DantGwyrdd — Tue, 10 Mar 2015 20:08:50 GMT

Since the APRs are similar, I would use that money to pay off as many as you can first and then work on the rest like Pway suggested. The reason I'd take this route is that you can then redirect the money you'd otherwise use to continue making minimum payments on those cards, towards paying off one of the higher balance cards and then when you pay off that one, move all of those payments to another one, etc.

Re: which credit cards do i pay off first?

takeshi74 — Wed, 11 Mar 2015 12:31:48 GMT

@Anonymous wrote:
I have about $4000 that i would like to use towards paying my credit cards, but many of them have the same APR (18%-22% with the exception of chase slate & conns which is 0%) so i cant go based off of APR.

With the utilization you have on several of those cards I'd suggest focusing on getting the highest utilization cards down first. You have 3 cards that are maxed and 7 over 50%. Get the maxed ones down and work on getting them all under 50%. Then worry about APR and paying off balances as you can to reduce the number of reporting balances. You do not want to incur adverse action because you've been at high utilization for a long time. Utilization is a significant risk factor.

Set up a spreadsheet to figure out how to apply payments. You can create formulas that calculate current utilization and what it would be after a given payment. Once you've set them up you can play around with allocating payments and see how they affect utilization.

@Anonymous wrote:
And I also have a sams club MasterCard 2800/3500

Make that 8 over 50%.

General advice is do not exceed 30%.

@Anonymous wrote:
rooms to go 390/1500 (limit was recently reduced from 4000)

Why was this reduced?

Re: which credit cards do i pay off first?

Anonymous — Wed, 11 Mar 2015 15:31:55 GMT

They lowered it because the "propotion of balances to credit limits on bank/national revolving or other revolving accounts is too high"

Re: which credit cards do i pay off first?

Anonymous — Wed, 11 Mar 2015 15:56:28 GMT

So comparing the 2 scenarios of paying down the lowest balances vs paying the ones with the highest % of utilization, which scenario is essentially "better"?

cap1 quiksilver 2390/3000 cap1 quiksilver 1790/3000

cap 1 platinum 1795/2250 cap 1 platinum 1350/2250

cap 1 (not sure which card) 0/710 cap 1 (not sure which card) 276/710

walmart 250/1200 walmart 710/1200

rooms to go 390/1500 rooms to go 390/1500

sams 2780/3500 sams 2095/3500

home depot 254/1500 home depot 880/1500

tjx 2181/2750 tjx 1646/2750

macys 0/600 macys 70/600

dillards 1332/5800 dillards 1332/5800

target 140/700 target 415/700

chase freedom 90/200 chase freedom 90/200

chase slate 210/500 chase slate 296/500

babies r us 2038/3000 babies r us 1797/3000

kohls 492/800 kohls 472/800

Re: which credit cards do i pay off first?

CH-7-Mission-Accomplished — Wed, 11 Mar 2015 16:15:13 GMT

I would pay the accounts above 89% balance first.

If you want to save the most in interest, pay the highest rate cards frst

If it were me, I would first pay down the maxed out cards to 89% and then rather than having to pay 15 payments a month, I would begin by paying off the lowest balance card first, and then rolling that payment amount into the next card and so forth, while keeping up minimum payments on the other cards.

Re: which credit cards do i pay off first?

onstar — Wed, 11 Mar 2015 20:06:09 GMT

@Anonymous wrote:
There are several different schools of thought on how to pay off the cards. The most efficient way is generally to pay off the highest interest card first and move down the list based on APR. However, for some, the motivation of feeling like they achieve something is important and paying lower balances first can help you achieve that. Moreover, when balances are low on cards and the minimum payment is at the floor for the card (often $25), paying off the card could lower your overall minimum payment across all cards more so than paying off a higher balance card. However, in general, paying off the highest interest card first will save you more money.

This is key for me. While it is important to pay the highest interest cards first, it is more important that you stick to diligently paying off the debts. Plus by eliminating payments on some cards, you'll have fewer payments to deal with each month.