I am currently in the same situation you are in, only from reading your post I think I'm a little further along in figuring out how to pay off debts. Even though I want a higher Fico as well, it's more important for me to get my debts under control and paid off, once that happens, my Fico will go up as well, automatically. I currently have just over $20000. in CC debt placed on 6 cards.
While I agree that it is important to pay the debts off, not just move them around, moving them around may help you get less interest rates, and therefore be able to pay them off sooner. I have done this with all of my debt, and at the current time, 4 of my 6 cards are at 0% interest, 1 is at 5.9-6.9% until 2010, and one is 2.99% for the life of the balance transfer. My moving my debt around has enabled me to pay it off quicker because I'm paying less interest.
Because you didn't list your interest rates for all the cards, I'm going to use hypothetical numbers for the following: Generally speaking, you should work towards paying off your higher interest rates before paying off the lower interest rates. This includes paying off a card that is at 20% interest before touching the card that's at 0% interest. The reason being is that even though that card is at 0% and yes you would be saving money by paying that one off while it's in the 0% interest range, you're losing money on that 20% one if you just pay the minimum.
There are two exceptions to the above: 1. If your 0% interest card is going to charge you back interest at the end of the 0% interest period, then get that one paid off first. 2. If once the 0% interest is over that interest rate is going to be higher than your card with 20% interest. I do have cards that are are around 75% util, and that is sinking my Fico score, but I know they'll go down as I pay stuff off and that will raise my Fico score.
Find out if any of your credit cards offer BTs that will allow you to move your debt around and pay less interest, thereby saving money. If not and your 12.9% is your highest interest rate, focus on that one. Pay the minimums on the rest of the debts and put as much money as you can towards that highest interest rate. As your debts go down on your cards, your minimum payment may go down as well, but keep paying what you originally started out on. For example, when I started truly focusing on my debts in November I had a card that had a minimum payment of $107. Now that minimum payment is $98, but I still pay the $107 every month. What that does is help me make progress on the debts I'm not focusing on, and it doesn't affect me to pay that little bit extra because I've been doing it for 4-5 months.
So, if that 6.9% for the life of the balance transfer is going to save you money, and allow you to pay off your debts faster, then I say go for it. Just make sure you're doing the following:
1. Find out what the charge for the balance transfer is going to be, and then look at that charge versus what you would be paying in interest. If you're going to save money, even with the BT charge, then it's worth it. If you're not, then it's not worth it.
2. Stop charging. If you transfer a balance and then use the cards, it's not going to help. It sounds like you're already at that point, but I know I have to remind myself of that from time to time.
3. Don't be late, don't miss a payment: if you are, your special offers will disappear and you may end up getting higher interest rates than you had originally.
4. Make sure you keep track of when your special offers end, that way you'll have a better idea of where to send your money to.
5. Focus on what will save you money versus your Fico score. Money's more important. I have cards that are around 75% util which is bad for Fico, but I'm saving interest on those 0% offers, and eventually the util will go down.
This is stuff that I've learned, and that's helped me, I'm not an expert, otherwise I wouldn't be 20 grand in the hole with the CC debt. I also went out and got a part time job to help get me more money to pay my debts off. Hopefully there's one thing here that will help you out. Because I know what it's like to have 27 grand in CC debt, and just wanting it gone, but not being quite sure on how to get there. It'll happen for both of us, as long as we stay focused.
Message Edited by woopah on 03-26-2008 06:39 AM
