Reducing overall utilization (on all cards) vs paying off highest interest card first?

[leo222]

Hi all, I recently reduced my credit utilization from 80% to 60% (mostly longstanding debt that I incurred when I was in school and struggling financially) - I paid off my highest interest card fully, and then paid 30% of the next highest interest card (the one with the largest balance). As of right now, of my remaining cards, my utilization is 90% and 62% (the next highest interest card that I spoke of earlier, that I paid 30% of); I also have two other smaller cards with zero balance, as well as two other retail cards (with zero balance). The highest interest rate card is at 14.24%, with my other card being 11.49%.

My question is whether I should continue what I'm doing, by concentrating on reducing the highest interest card, vs reducing the utilization on both cards. I guess it seems like a stupid question on the surface (who wouldn't pay the highest interest card first?), but I am interested in one of the higher end balance transfer cards (i.e. barclay and/or chase slate) that have no balance transfer fees (to help me hammer out my remaining debt with 0% interest), and I heard and read on here that they will look to see if you have low utilization on all cards.

[Anonymous]

Well, it's hard to know w/o your scores and a full profile picture.

As to the debt... 

You get the most points for # of cards w/o a balance... so, if you have one that's closer to $0 knock it out for the points boost.

You get more points for your aggregate / single card utilization being under 8.9% 28.9 and so on

You get points just for making payments

Things that will impact the ability to get those cards will also include your 5/24 status 

[Remedios]

You dont have to have ultra low utilization for BT cards, but debt has to look like something you're capable of paying off. If it looks like you're in too deep, you'll get denied or approved with poor terms (usually low SL reducing lender's risk)  

 I would not try with a card that's utilized more than 50%-60% depending on overall profile. 

Another relevant part is 90% of what? If it's 90% of few thousand, a few lifestyle adjustments can help you pay it down faster. If it's  90% of larger amount, then totally different story. 

Like @Anonymous  already stated, your post does not have enough info to even start the guesswork. 

Listing all your cards with lenders names (balance shuffle may be an option depending on who they are), dates opened, limits and balances in addition to APR would really be helpful 

[tcbofade]

If applying for a new card is the goal, you'll want to pay down the card that is reporting 90% utilization first.  Anything over 89% is maxed out and is hurting your Fico 8 score.

Pay that one down and wait for it to report the new balance before applying for anything and you'll get better results.

Good luck!

[leo222]

Thanks for the reply, tcbofade (and everyone else)! The only reason why that particular card has such high utilization, is because my other card (with higher interest) had the same utilization (about 90%), and I decided to start paying that one down first (paid it down by 30% last week) because it had the higher interest of the two cards.

[Anonymous]

When I had interest bearing balances on multiple cards, I used the snowball effect trying to pay them down.

This was suggested to me by a loan officer when I was getting info about applying for a mortgage.

I paid minimums on the cards (the reason I was able to do this, was because I wasn’t putting anymore charges on any cards, I was paying cash for everything) and saved up the extra. When I had enough money to pay the lowest balance off, I did so. Then I took the minimum payment from that card and added it to the minimum of the next lowest card. And I contributed to do this until the debt was paid off. The balances weren’t high enough to make interest charges too ridiculous and I was able to get rid of a fair amount of debt in about 6 months.

Of course, YMMV. Giving us more info would certainly make it easier for us to give suggestions

[Anonymous]

There are a few factors in play here. Your answer will depend on if you want to avoid paying the most interest or maximize your scores as you pay down debt. 

With the former you wil achieve the best results by simply paying down highest interest cards first. IMO this is the least sophisticated approach and should be utilized only if you are actually strapped and being killed by interest or if your debt paydown will take a long time. 

The snowball method mentioned in this thread is one of the best debt paydow strategies from a psychological approach. Start with the smallest balances and work your way up. Paying off smaller balances provides positive feedback and makes it more likely you will form a debt payoff habit. This also speeds up the number of cards you have reporting $0 balances which is a boost for scores. 

If it were me, I would pay down cards that are maxing me out out first to the point where they are out of "maxed" status. There are different tiers regarding individual card utilization. Any one card reporting over 50% starts to weigh down scores. Other cards above 89-90% really weigh you down even if overall utiliztion is lower. I would pay down all cards to below that maxed out threshold of 89% first. Then I would use snowball method to zero out cards with lower balances and work your way up. This is kind of a hybrid approach that is best of both worlds IMO. Good luck. No matter how you do it paying down debt is a good thing, the path you utilize matters far less than the actual act of paying down debts each month.