topic Re: How to pay down debt in Rebuilding Your Credit

How to pay down debt

lshwn — Sat, 13 Aug 2022 10:13:53 GMT

Hello,

I have $2K to pay off debt. Would you recommend spreading $500 across four credit cards? Or should I use $1K to bring cc debt below 60 percent.

Examples: I have four credit cards and each have close to $2500 balance. Should I put $500 on each or pay down two credit cards with $1K each?

Re: How to pay down debt

FireMedic1 — Sat, 13 Aug 2022 11:06:00 GMT

Hey @lshwn

If you could list out the cards as:

Creditor name/Credit Line/Balance/APR

Then we can come up with a plan. APR will come into play also to save money from paying interest.

Thanks.

Re: How to pay down debt

lshwn — Sat, 13 Aug 2022 12:46:24 GMT

Discover	$2,923.90	20.74%
Capital One	$2,129.78	23.15%
BOA Travel Rewards	$1,395.54	23.24%
Capital One	$1,279.46	20.65%

Re: How to pay down debt

JM427 — Sat, 13 Aug 2022 12:52:17 GMT

@lshwn Can you add what the credit limit is for each account to your table above? You have the current balance and APR, but the credit limit for each card is a huge factor into developing the optimum plan.

Re: How to pay down debt

lshwn — Sat, 13 Aug 2022 13:04:32 GMT

Discover (KH)	$2,923.90	20.74%	credit limit 3900
Capital One	$2,129.78	23.15%	3000
BOA Travel Rewards	$1,395.54	23.24%	2000
Capital One	$1,279.46	20.65%	1750

Re: How to pay down debt

MySunrise271 — Sat, 13 Aug 2022 14:01:12 GMT

@lshwn wrote:
Discover (KH) $2,923.90 20.74% credit limit 3900
Capital One $2,129.78 23.15%           3000
BOA Travel Rewards $1,395.54 23.24%           2000
Capital One $1,279.46 20.65%           1750

If this was my situation, I would look at two options, while you didn't list your min required payments, that would factor into my first option. Which card has the largest pull on my monthly cash flow and can I free that up if I pay the card off now? Then snowball that payment (and any left over from the 2k, if any) into the next highest drain on my monthly cash flow. Second option, target the BoA card and wipe it out. My psyche would welcome seeing that 0 balance. Not to mention the interest savings. Roll the balance of the 2k into Cap1 (next highest interest card) and continue to snowball from there each month. That would give me the most amount of feeling accomplished and moving forward.You May even get a 2fer, if the card with the largest pull on monthly cash flow also happens to be the largest interest rate (BoA)🎉🎉🎉🎉 HTH

Good luck☺️

Re: How to pay down debt

FireMedic1 — Sun, 14 Aug 2022 10:09:22 GMT

If it was me. Payoff Cap1 (1279) and apply the rest to BoA since it has the highest APR. Then keep paying more than the min payment on BoA until its $0. The other 2 have high util. Not in maxed out territory. Finances over FICO for now. Use your debit card. No swipes.