topic Large lump sum payment- which card? in General Credit Topics

Large lump sum payment- which card?

alexak — Sat, 14 Jan 2017 00:01:20 GMT

I sure hope I'm posting this in the correct forum!! I have a large-ish lump sum payment I am able to make to one of my high balance credit cards-- about $800. Which card should I put it towards?

1) Balance of $2200/2300 at 24.45% apr
Or
2) Balance of $8888/9500 at 21.49% apr
Or
3) Balance of 2900/3200 at 22% apr

I'm leaning towards the highest balance... what are your thoughts? I'm trying to get my balances under 50% utilization so I can try to apply for the Slate card (and finally pay these suckers off for good).

Thanks in advance!!

Re: Large lump sum payment- which card?

SouthJamaica — Sat, 14 Jan 2017 00:08:22 GMT

@alexak wrote:
I sure hope I'm posting this in the correct forum!! I have a large-ish lump sum payment I am able to make to one of my high balance credit cards-- about $800. Which card should I put it towards?

1) Balance of $2200/2300 at 24.45% apr
Or
2) Balance of $8888/9500 at 21.49% apr
Or
3) Balance of 2900/3200 at 22% apr

I'm leaning towards the highest balance... what are your thoughts? I'm trying to get my balances under 50% utilization so I can try to apply for the Slate card (and finally pay these suckers off for good).

Thanks in advance!!

Pay

$175 towards the $2300 card

$525 towards the $9500 card

$100 towards the $3200 card

Re: Large lump sum payment- which card?

alexak — Sat, 14 Jan 2017 00:59:08 GMT

Never even thought to split it up! Awesome thank you!

Re: Large lump sum payment- which card?

SouthJamaica — Sat, 14 Jan 2017 03:27:34 GMT

@alexak wrote:
Never even thought to split it up! Awesome thank you!

Any time

Re: Large lump sum payment- which card?

Revelate — Sat, 14 Jan 2017 04:50:33 GMT

I'd pay the entire $800 to my highest APR and continue hammering it till it was zero and then start the next. Will take a while to make any significant dent in the debt to shift your FICO much, so I'd recommend doing the smartest thing financially which is stop as much interest bleeding as possible which is all $800 to that 24 and change APR card.

Re: Large lump sum payment- which card?

Anonymous — Sat, 14 Jan 2017 14:34:54 GMT

It sounds like the OP is more concerned in getting approved for another card than what he's paying in interest, meaning that optimizing his credit score at this time is priority #1 in order to get that Slate card and I assume use it for BT purposes which would then stop the interest issue. That said, I think SJ's plan sounds fine but I agree with Rev that while $800 is nice to pay down, it's still a relatively small amount next to those balances you are trying to tackle so scoring wise you may not achieve all too much.

Re: Large lump sum payment- which card?

alexak — Sat, 14 Jan 2017 15:58:32 GMT

While I am partially concerned about getting approved for another card, my biggest concern is getting my utilization down on these cards. I figured the best way to get these paid off for good is pay them down enough that I could get a balance transfer card so I can finish paying them off without having interest piling up.

I was hoping to have made a bigger dent in paying them down by now but the interest is killing me.

Re: Large lump sum payment- which card?

SouthJamaica — Sun, 15 Jan 2017 02:18:52 GMT

@alexak wrote:
While I am partially concerned about getting approved for another card, my biggest concern is getting my utilization down on these cards. I figured the best way to get these paid off for good is pay them down enough that I could get a balance transfer card so I can finish paying them off without having interest piling up.

I was hoping to have made a bigger dent in paying them down by now but the interest is killing me.

90% is considered maxed out for scoring purposes, so getting each card below 90% should be the first priority, and $800 happens to be just the right amount to take you there.

Re: Large lump sum payment- which card?

Anonymous — Sun, 15 Jan 2017 02:28:19 GMT

@SouthJamaica wrote:
@alexak wrote:
While I am partially concerned about getting approved for another card, my biggest concern is getting my utilization down on these cards. I figured the best way to get these paid off for good is pay them down enough that I could get a balance transfer card so I can finish paying them off without having interest piling up.

I was hoping to have made a bigger dent in paying them down by now but the interest is killing me.
90% is considered maxed out for scoring purposes, so getting each card below 90% should be the first priority, and $800 happens to be just the right amount to take you there.

In fact you will find scoring breaks at each multiple of 10% - so once you get them under 90%, next goal is under 80% and so on - once you have them down to 50% would be the time to look at paying one or more completely off

This is all assuming you are not able to refinance, of course - which you should be able to do somewhere around 60%-80%. You can try to do this to a BT card, but it may be a smarter move to use a personal loan to get the money off your revolving balances entirely (installment debt hurts you a lot less than revolving)

Good Luck!

Re: Large lump sum payment- which card?

Anonymous — Sun, 15 Jan 2017 04:15:52 GMT

@Anonymous wrote:

In fact you will find scoring breaks at each multiple of 10% - so once you get them under 90%, next goal is under 80% and so on - once you have them down to 50% would be the time to look at paying one or more completely off

Are you certain about this? I've always understood the break points to be every 20% starting with 90%, so it would then be 70%, 50%, 30% and 10%.

Re: Large lump sum payment- which card?

Anonymous — Sun, 15 Jan 2017 04:37:18 GMT

@Anonymous wrote:
@Anonymous wrote:

In fact you will find scoring breaks at each multiple of 10% - so once you get them under 90%, next goal is under 80% and so on - once you have them down to 50% would be the time to look at paying one or more completely off

Are you certain about this? I've always understood the break points to be every 20% starting with 90%, so it would then be 70%, 50%, 30% and 10%.

In all honesty - no, because for me it's all theory and (cross my fingers) is going to remain that way because I (hopefully) learned my lesson about carrying balances in my BK.

That said, I remember reading a post (that of course I can't find) which recommended stepping down by 10% as a good goal for a pay down. Of course, even if it's not a major breakpoint from a scoring POV, it's psychologically quite a bit easier to motivate to pay down 10% chunks than 20% chunks at at time

Re: Large lump sum payment- which card?

Revelate — Sun, 15 Jan 2017 14:57:24 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:

In fact you will find scoring breaks at each multiple of 10% - so once you get them under 90%, next goal is under 80% and so on - once you have them down to 50% would be the time to look at paying one or more completely off

Are you certain about this? I've always understood the break points to be every 20% starting with 90%, so it would then be 70%, 50%, 30% and 10%.
In all honesty - no, because for me it's all theory and (cross my fingers) is going to remain that way because I (hopefully) learned my lesson about carrying balances in my BK.

That said, I remember reading a post (that of course I can't find) which recommended stepping down by 10% as a good goal for a pay down. Of course, even if it's not a major breakpoint from a scoring POV, it's psychologically quite a bit easier to motivate to pay down 10% chunks than 20% chunks at at time

Got it in one. Individual tradeline utilization doesn't have many breakpoints seemingly, aggregate has more.

FWIW I always recommend paying off high interest first regardless of credit impact as at the end of the day money >> FICO, and the more money you save, the faster it will be paid off. Debt snowballing is a psychological effect too but with anything it's rare to be able to focus on long term goals so setting shorter term benchmarks can be huge as markers for progress.

Re: Large lump sum payment- which card?

SouthJamaica — Sun, 15 Jan 2017 15:17:33 GMT

@Revelate wrote:
@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:

In fact you will find scoring breaks at each multiple of 10% - so once you get them under 90%, next goal is under 80% and so on - once you have them down to 50% would be the time to look at paying one or more completely off

Are you certain about this? I've always understood the break points to be every 20% starting with 90%, so it would then be 70%, 50%, 30% and 10%.
In all honesty - no, because for me it's all theory and (cross my fingers) is going to remain that way because I (hopefully) learned my lesson about carrying balances in my BK.

That said, I remember reading a post (that of course I can't find) which recommended stepping down by 10% as a good goal for a pay down. Of course, even if it's not a major breakpoint from a scoring POV, it's psychologically quite a bit easier to motivate to pay down 10% chunks than 20% chunks at at time
Got it in one. Individual tradeline utilization doesn't have many breakpoints seemingly, aggregate has more.

FWIW I always recommend paying off high interest first regardless of credit impact as at the end of the day money >> FICO, and the more money you save, the faster it will be paid off. Debt snowballing is a psychological effect too but with anything it's rare to be able to focus on long term goals so setting shorter term benchmarks can be huge as markers for progress.

Yes but the OP's near term goal is to qualify for the Slate card, so improving his FICO score is critical.

Re: Large lump sum payment- which card?

Revelate — Sun, 15 Jan 2017 15:37:53 GMT

@SouthJamaica wrote:
Yes but the OP's near term goal is to qualify for the Slate card, so improving his FICO score is critical.

Right path to that would be looking at a considation loan for some or all of the current debt. Much longer walk to a BT card, which I suppose still prioritizes FICO to your point if that's the primary concern.

And I was repeating what I stated above anyway, I need breakfast haha.

Re: Large lump sum payment- which card?

Anonymous — Fri, 20 Jan 2017 18:35:58 GMT

If you haven't paid any of the cards, pay the card with the 24.45% apr first. The balance on the car is lower and once you knock it down it will be easier to pay off, especially with the lower balance. I make two payments a month on my cards. I pay the normally monthly payment and then I pay the interest.