Hello all, long time lurker on the forums, love reading. Need some advice please.
I'm not looking for "stop spending on credit." I learned the hard way after getting so many cards early and not managing them properly,(I'm currently 20) that they could get me into trouble. Luckily, I have a decent paying job and can survive on multiple payments and now survive on debit transactions. However I wanted to get the community's opinion on whether to BT or to keep my separate payments. Is it better to max out a certain card and pay a higher interest, rather than pay interest on multiple accounts?
Below is my current table, updated today with balances and limits (I did not update the regular monthly payments to go along with current balances). I included the BT rate on the ones I am considering. I am currently taking advantage of an offer from discover for 12 months no interest on a BT, which was separate from the one that came when I got the card, which is why the balance is so high.
I'm open to all options except apping, I've tried to get Slate and Simplicity, but I app'd too late and recon wasn't available because my scores dropped due to balance, wish I would have jumped sooner before I killed my DTI ratio.
Thank you in advance
All else being equal, and with no new cards applied for, your best bet is to leave the balances where they are, and emphasize one of two strategies:
1) Pay down the lowest open amounts first, then shift those monthly payments ( in a snowball) to the next larger balance.
2) Pay down the highest APR first, then shift the monthly payment to the next higher APR. This is a debt avalanche. Your cards APR are not that far off, so this is marginal difference.
In your analysis, be sure you separate out the car payment and NFCU LendKey item, those should not be in the analysis of Credit Cards.
Any BT you do to these cards probabaly incurs a 3% or 4% BT Fee. This sets you back, unless the card is offering a reduced APR, which it sounds like not.
Have you checked with NFCU about a consolidation loan?
Sometimes the problem with a consolidation loan, and even BT onto one card is that the cardholder can now see a lower minimum payment amount, and slack off the heavy payments. Having the card balances in place forces you to not let up as the balances decline, so hopefully the balances go down faster.
I would focus on getting the Freedom card to zero first, partly due to the APR, but also because with Freedom at zero, you then have a good PIF card that you can shift your Debit charging to. Just be certain that you do pay in full every month going forward.
I suppose the advantage of moving all balances onto one card would be having less payments to remember and keep track of, although the spike in utilization on that card might make the issuing bank nervous. As far as paying interest, well, honestly, the only way to find out the answer to that is to do the math and see whether it's cheaper to pay higher interest on one card or lower interest across multiple cards. Although I'm thinking it'd be cheaper to pay lower interest on smaller balances across multiple cards rather than BT a huge $10k balance onto one card and pay a higher interest on that. Not to mention the hefty BT fee(s).
@ayeecorreia wrote:Hello all, long time lurker on the forums, love reading. Need some advice please.
I'm not looking for "stop spending on credit." I learned the hard way after getting so many cards early and not managing them properly,(I'm currently 20) that they could get me into trouble. Luckily, I have a decent paying job and can survive on multiple payments and now survive on debit transactions. However I wanted to get the community's opinion on whether to BT or to keep my separate payments. Is it better to max out a certain card and pay a higher interest, rather than pay interest on multiple accounts?
Below is my current table, updated today with balances and limits (I did not update the regular monthly payments to go along with current balances). I included the BT rate on the ones I am considering. I am currently taking advantage of an offer from discover for 12 months no interest on a BT, which was separate from the one that came when I got the card, which is why the balance is so high.
I'm open to all options except apping, I've tried to get Slate and Simplicity, but I app'd too late and recon wasn't available because my scores dropped due to balance, wish I would have jumped sooner before I killed my DTI ratio.
Thank you in advance
IMHO your strategy should be to reduce all accounts w >50% utilization to <50% utilization.
Then the same for those > 30%
The same for those > 10%
Also, ask for NFCU to CLI your card.. look at the official NFCU thread for guidance with that.. it's possible that you can increase that significantly which will help your scores in the short term.
However, you're going to need to BT, atleast to me, unless you can pay all of it all off quickly because the interest rates are quite high. Also, ask for APR reductions regularly for all of your accounts.
Not sure if you would be approved for what you would want right now limit wise for a 0% card (like Slate or Simplicity.) Get your utilization in better check, let that report, see the scores improve, then app for Slate or Simplicity with an attempt to get the balances on one card possibly. I would put serious effort in payments with the CSP if you plan on apping for the Slate, but also another thing to consider is if the Slate is subject to the 5 new account rule? Are you ok new account wise? If not, then focus on APRs, get scores maximized then app for simplicity and move all over to it. If they don't give you enough call a human and recon the CL. (I would do it even if it means another HP.)
Have any of us asked your yearly income? I ask this because if it's higher you should be able to knock these balances out without a BT, possibly? If it's lower, that can alter recommendations, as well.
