No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
Hi!
My credit score wasn't great before (TU-639, Eq-644, Ex-642 as of 01/19/09), and I'm sure is much lower due to putting outrageous balances 6 of my credit cards (I also have a 7th with a $20 balance that will be paid off next month.) I want to pay them off over the next year, and am wondering how I should go about it. Should I make minimums on each card and put all the left over money to one at a time to pay one off completely, or should I split the money between them all to slowly pay each card down over the next year?
On another note, I have a collection on my report for an account that should not have been past-due in the first place. How do I get it removed? Do I call the company who reported me, call the collection agency or try contacting the credit bureau?
-mielejam
What you are describing is the "snowball" pay plan. And yes, it is a very effective way to go. You can either concentrate on your lowest balance card first or your highest APR card first. There are proponents for each. The benefits of lowest balance is that you will reduce the number of accounts with a balance and thus the number of accounts requiring a payment sooner.
The concept of highest APR is to reduce the principle and thus the interest accruing against that balance faster. Either way is good....as long as you stick to it.
Good luck.
@Anonymous wrote:What you are describing is the "snowball" pay plan. And yes, it is a very effective way to go. You can either concentrate on your lowest balance card first or your highest APR card first. There are proponents for each. The benefits of lowest balance is that you will reduce the number of accounts with a balance and thus the number of accounts requiring a payment sooner.
The concept of highest APR is to reduce the principle and thus the interest accruing against that balance faster. Either way is good....as long as you stick to it.
Good luck.
+1
I agree. Snowballing is a great way to go. You can also start with paying off the accts with the smallest balances, this gives you encouragement and determination to work even harder to pay off the other ones. Also, always reward yourself or treat yourself on paying off each card as a milestone - this will keep you focused.
Welcome to the forums! If you want more specific help then please list your credit card balances/limits and APRs so that we may better assist you.
Thanks for the welcome and advice so far!
Here are my cards, balances, CLs and APRs:
DISCOVER - $1,401.91 of $1,500 @ 28.99%
CAPONE - $725.00 of $750 @ 15.8%
CAPONE - $859.50 of $2,000 @ 0.0%
MEIJER - $961.00 of $1,130 @ 34.0%
CHASE - $882.18 OF $900 @ 19.24%
MSUFCU - $2,121.21 of $2,500 @ 12.9%
VCF - $20.19 of $3,400 @ 0.0%
Wow, it looks bad when it's listed like this. Please help!
@Anonymous wrote:Thanks for the welcome and advice so far!
Here are my cards, balances, CLs and APRs:
@discover - $1,401.91 of $1,500 @ 28.99%
@capone - $725.00 of $750 @ 15.8%
@capone - $859.50 of $2,000 @ 0.0%
@MEIJER - $961.00 of $1,130 @ 34.0%
@Anonymous - $882.18 OF $900 @ 19.24%
MSUFCU - @$2,121.21 of $2,500 @ 12.9%
@VCF - $20.19 of $3,400 @ 0.0%
Wow, it looks bad when it's listed like this. Please help!
Hi...and, ouch.
As said before, you will get differing opinions based on differing goals/priorities.
I'm a highest-interest-rate-first payer. I would tackle that Meijer card with the 34% interest first by paying the minimum payments on all my other cards and then throw any extra I could to the Meijer card. Then, when that card is done, start on the next highest interest rate card. That will be your most economical solution over time.
Also, I think you said you were paying the $20 card off. Do that, and then put it away. Don't use it except to put a small amount on it every 3 mos or so to keep it active.
You also asked a question about a collection account. I would ask about that on the Rebuilding Your Credit forum. Lots of folks experienced with collection accounts over there.
Thank you, I may try to go that route, that way I would only have one monthly payment. With my outstanding balance, how much do you think my monthly payment on a consolidated loan would be?
Update:
DISCOVER - $1,343.65 of $1,500 @ 28.99%
CAPONE - $639.73 of $750 @ 15.8%
CAPONE - $844.00 of $2,000 @ 0.0%
MEIJER - $0.00 of $1,130 @ 34.0%
CHASE - $851.97 of $900 @ 19.24%
MSUFCU - $2,053.50 of $2,500 @ 12.9%
VCF - $0.00 of $3,400 @ 0.0%
Total - $5,732.85 of $8,780
Monthly income = ~$2,000.00
Hi, mielejam, and welcome, welcome, welcome!
Your debt is manageable, so don't feel overwhelmed. I agree that snowballing is the best way to go (it's what I've got planned for my son to help him kill debt) because of the mental boost it creates and you see results right away.
As far as a consolidation loan, I believe you have to have collateral to use for the loan, and some lenders also require you to close your accounts. Doing so will not help your score, but make an appt with a credit union and talk to a loan officer and ask about their loans to find out requirements and interest rates.
Best of luck to you!