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My cards are very close to be maxed out. Which should I pay first?

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New Member

My cards are very close to be maxed out. Which should I pay first?

Hello, After a few months of being unemployed, I got a new job and with it came a Sign On Bonus of $6000. I know it wont cover my huge bill, but at least I want to make best distribution of this money Into these cards.
Thanks

America Express $3960 balance/$4060 credit
Citi $1985/$2000
Wells Fargo $8233/$8300
Chase $1300/$1400
Best Buy $900/$1100
diners $2800/$3200
Message 1 of 27
26 REPLIES 26
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Regular Contributor

Re: My cards are very close to be maxed out. Which should I pay first?

What are the interest rates on these cards?

 

I'd pay the ones with the highest interest rate. 

Scores: 753 TU (Barclay), 750 EX (Fico8), 749 EQ

Chase Freedom Unlimited (6k), CSP (20k), Amex Delta Platinum (13.5k), Amex SPG Luxury (16k), Barclay Apple (12.5k), USBank Flexperks Travel Rewards (12k), Wells Fargo Visa Signature (10k)
Message 2 of 27
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Mega Contributor

Re: My cards are very close to be maxed out. Which should I pay first?


@Anunaki wrote:
Hello, After a few months of being unemployed, I got a new job and with it came a Sign On Bonus of $6000. I know it wont cover my huge bill, but at least I want to make best distribution of this money Into these cards.
Thanks

America Express $3960 balance/$4060 credit
Citi $1985/$2000
Wells Fargo $8233/$8300
Chase $1300/$1400
Best Buy $900/$1100
diners $2800/$3200

Congratulations on getting the new job.  The answer depends on your goals to some extent.   If it is simply reducing interest costs, pay off the card(s) with the highest APR.   If it is score (which it almost certainly shouldn't be IMO!) you may want to spread it out more evenly to reduce slightly utilization on all the cards.   

 

 

Related is how your new salary compares to the debt: if you are able to pay all this off in a few months, it doesn't really matter all that much what you do, if it's going to take much longer, then the goals matter more.

Message 3 of 27
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Senior Contributor

Re: My cards are very close to be maxed out. Which should I pay first?

It's possible you'll get balance chased depending on how long your util was that high.

 

I'd pay off whatever has the highest interest rate.

Message 4 of 27
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Frequent Contributor

Re: My cards are very close to be maxed out. Which should I pay first?

Personally, I would look at trying to consolodate the debt into a single payment.  Whether that is a balance transfer (best option if you can get enough credit to cover the total, and can pay it off in the promo period) or a personal loan.  The personal loan will make your credit score sky rocket becuase you will have zero credit card debt and will wipe out all near maxed out balances.

Message 5 of 27
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New Member

Re: My cards are very close to be maxed out. Which should I pay first?

Thank you all for the advice. Very grateful!!
Here is what I have on IR

America Express $3960 balance/$4060 credit 29.99%
Citi $1985/$2000 29.99%
Wells Fargo $8233/$8300 21.00%
Chase $1300/$1400 0%
Best Buy $900/$1100 24.99%
diners $2800/$3200 29.99%

Because of the higher balance I have on the WFC, the minimum payments on that card are higher compared to the rest. At this point I just want to pay my card debts. I would like my score to improve because now that I'm back on the job force, I would like in the future (1.5 -3 years) apply for a mortgage, but honestly, What I just want is to pay all this quickly. That's my priority # 1.
Message 6 of 27
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Senior Contributor

Re: My cards are very close to be maxed out. Which should I pay first?

Make minimum payments on the 3 cards with the lowest APR, then do equal payments across the other 29.99% cards to bring utilization down on them.

 

You need to get all your cards down to 0% except for one card where you keep the statement balance between 1 and 9% by using it each month and paying it down back to 1-9% (but not 0%).  So even with a new job, stop spending money on non-essentials until you get your cards back to 0% except for one card.

Message 7 of 27
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New Member

Re: My cards are very close to be maxed out. Which should I pay first?

Thank you!!
Message 8 of 27
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Mega Contributor

Re: My cards are very close to be maxed out. Which should I pay first?

I guess missing from our analysis is your immediate credit need.   Do you, for example, have to buy some new clothes or similar stuff for the new job, or have something urgent that you will need to charge.   If so, you might want to use some of the bonus on that rather than paying down cards.   And/or, you might want to put most of the money on one of the cards, to allow you some room to charge on that card (ONLY if you REALLY REALLY need to).   But as someone said, you might get balance chased anyway,

Message 9 of 27
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Community Leader
Super Contributor

Re: My cards are very close to be maxed out. Which should I pay first?


@Anunaki wrote:
Thank you all for the advice. Very grateful!!
Here is what I have on IR

America Express $3960 balance/$4060 credit 29.99%
Citi $1985/$2000 29.99%
Wells Fargo $8233/$8300 21.00%
Chase $1300/$1400 0%
Best Buy $900/$1100 24.99%
diners $2800/$3200 29.99%

Because of the higher balance I have on the WFC, the minimum payments on that card are higher compared to the rest. At this point I just want to pay my card debts. I would like my score to improve because now that I'm back on the job force, I would like in the future (1.5 -3 years) apply for a mortgage, but honestly, What I just want is to pay all this quickly. That's my priority # 1.

Is the $6K taxed? If so, you will probably see appx. $3,600. Or is the $6K net.

 

If it were me, especially if no derogs, I would

  1. See if I could get a SP CLI on Citi
  2. Go ahead and try for a CLI on Chase (will be a HP)
  3. See if I can get int rates reductions
  4. Then if the $6K is net, I would pay off AmX and pay the remaining on Diners ($2,040). Then all of AmX pymts can go toward WF and after paying off the remaining Diners ($760), that pymt can go toward WF.

Congrats on your new job and good luck to you.



DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799

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