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

Regular Contributor

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

@nolamike wrote:



At this point score is not your main concern, and frankly even interest is second to getting total amount owed down.


With all due respect, the above statement does not make much sense. If score is not the main concern the getting the total amount owed down (other than reducing total amount paid) is not either. 


Going the other way around, if total amount owed is the main concern then paying of the highest interest rates first will help you do that faster than paying the lowest rates.


So basically, Highest Interest Rates first IS the main concern and is not second to total amount owed but is the primary means to ensure the fastest reduction in total amount owed

Message 21 of 27
Community Leader
Senior Contributor

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

There are a number of ways to prioritize. In no particular order:


High-interest-first method: This would be the cheapest method and probably the quickest.


Snowball method: This gets rid of the small balances first by paying off as many individual cards as possible. It has the emotional benefit of offering a sense of accomplishment.


Scoring method: This would be done if something important like a mortgage is coming on. The borrower would look to pay off as many cards as possible while bringing larger balances to a point below a significant scoring threshold.


Normally, one would choose either the high-interest or snowball route and let scoring come along for the ride. I think a big priority for anyone is to do what one can to make lenders less spooked. That's why I like to suggest getting balances down so they're no longer maxed. After that, one can fall into one of the above methods.


In this case, the OP has high interest balances that can be paid off immediately, thus getting both high-interest and snowball benefits.



Message 22 of 27
Frequent Contributor

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



with all due respect to you, at the outset here, the OP is all but maxed and he has started a new job.


His first priority is getting a daily driver that he can use sparingly for a couple months while paying down the others.


He has responded that the 6K is NET so that helps him and the discussion, but we stil do not know his income/take home from the job. Knowing the 6K is net then it changes the path a bit.


For the initial period getting his UTI down is more important than anything so getting two, three or four of the cards to below 50%. This gives him a better chance at getting a loan to consolidate the rest.


Saving 5 or 10 bucks of interest on a single card, heck even a 100, would not help him pay off in the fastest way possible particularly if that highest-interest card is one of his big debts.


Think about his numbers. He shows 20K in total lines, 19 + K used. The 6k bonus will take him down to 13+K used, which is good.


The Diners club card is likely a high interest rate, The WF is maxed, and the AMEX has a 1/12th of credit line as a minimum payment.


If he pays Citi and Chase to 50%  he uses 1642.50 of his 6K bonus. Leaving him 43xx.00 for the others.

I would put the 3xx.00 amount to best buy and split the remainding 4K between WF, Amex, and DIners.


6K distribution at amounts proposed in bold

America Express $3960 balance/$4060 credit @1000 2960/4060

Citi $1985/$2000 @ 50% 992/2000
Wells Fargo $8233/$8300/  @2000   6233/8300
Chase $1300/$1400  @50%  650/1400
Best Buy $900/$1100 @3xx.00  5xx.00/1100
diners $2800/$3200 @1000  1800/3200.


The bonus gets him off the edge for all cards if distributed as above. Dropping 3 cards to 50% or less UTI. Assuming his monthly paychecks leave him $2,500 to pay towards debt, his smart move is to pay off Citi, Chase and Best Buy to 0. that gets him two possible daily drivers and a sock drawer.


His second months pay, assuming the same $2,500 available, could put 1800 toward Diners and then to the sock drawer, with the remaining split between Amex and WF


This is how he looks after Bonus and 1st month path w/ an assumed $2,500 a month toward debt repayment



America Express $3960 balance/$4060 credit @1000 2960/4060 (monthly paid with bonus payment)

Citi $1985/$2000 @ 50% 992/2000 @ month 1 end 992 0/2000
Wells Fargo $8233/$8300/  @2000   6233/8300  (monthly paid with bonus payment)
Chase $1300/$1400  @50%  650/1400 @month 1 end 650 0/1400
Best Buy $900/$1100 @3xx.00  5xx.00/1100 @ month 1 end 5xx.00  0/1100
diners $2800/$3200 @1000  1800/3200. (monthly paid with bonus payment)


Starting month 2 of employment on this plan he as paid off 8.5K of the 19K + he owes leaving 10,993 owing

Citi $0/2000

Chase $0/1400

Best Buy $0/1100


America Express $2960/4060

Wells Fargo $6233/8300
Diners $1800/3200.


Assuming the same $2,500 available for Month 2 debt payment. I would pay off Diners and Sock Drawer it, then split the remain 700 between Amex and WF. That gives him 4 tradelines with 0% UTI and owing:


Amex 2610 /4060

WF 59xx/8300


That 8Kish debt with a 5K a month income and four paystubs should get him a personal loan to consolidate, making this his fastest way to pay off the monthly debt to a reasonable level.


In his case if you attack interest rates first, you may save a couple hundred in interest on a card but in the long term you pay higher dollar amounts for a longer time on the other cards and it takes months to this same point.


since we do not know what his take home pay is, assuming a 60K annual net income is not a bad starting place, the OP will have to work the numbers himself or share them here.


If for example his take home is 9k that he can apply towards debt, the calculation changes, and by all means look at the interest rates, but frankly I would still follow this same path to reduce totals to under 50%, suffer for two months and take out a 36 month loan to get rid of the last CC debt. Sock drawer all the cards but the daily driver for at least 4 months and learn to live on CASH.


you have to keep in mind that not everyone has the same priorities (of saving on interest) in the short term. He is currently drowning in debt but in two months he can be clean even if he pays a couple hundred in interest on the higher interest cards.


The OP needs to choose what is best for him, and therefore he needs to know all the options and then decide what is best for him, a two month plan or a 10 month plan

Starting Score: EQ 628 | TU 643 | EXP 618
Fico 8 12/22/16: EQ 658 | TU 682 | EXP 721
Next Goal:        700's across the board
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Message 23 of 27
Valued Contributor

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

The issue is gat OP has already received AA. He will almost certainly be balance chased if he makes partial payments and he's right back at maxed out util.

High apr may be less of an issue if you're talking about a handful of $300 limit store cards but OP is carrying some hefty balances. Pay off the high APR cards and then take those $175 monthly payments towards the next highest debt and so on.
11/2017: EX 704 | TU 720 | EQ 672 -- Starting (2/2016): 630 | 620 | 580 -- INQs: 17 | 26 | 28 (last 6 months: 5 | 2 | 6)
AMEX Delta: $10k, Marvel: $8k, Discover IT: $7.2k, AMEX BCE: $6k, Target MC: $5k, PayPal 2%: $8k, CO QS: $2.6k, Merrick: $1.6k, Barclay's NFL Rewards: $1k, CO BuyPower: $500. And a mix of well-loved store cards.
Message 24 of 27
New Contributor

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

@Starz26 wrote:

@ABCD2199 wrote:

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.

Just to clarify this point, always pay it down to zero after the statement cuts. That way the util will report and by paying it off you will not be charged interest. the but not 0% refers to the reporting not carrying a balance from statement to statement

Chase re-reports a PIF to $0, but not all lenders do. You're fine so long as you PIF the full statement balance by the due date, which will be a few days before the next cut date. You simply want to make sure utilization is 9% or less on your cut date every month; there's no need to worry about it more than that.

Message 25 of 27
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 feedback.

The bonus is already taxed, so it is $6K net.

That's great! Definitely more money to work with!!!

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

|| NFCU CashRewards $30K || AmX Cash Magnet $30K || Discover IT $24.7K || Macy's $20K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 26 of 27
Senior Contributor

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

Are some of those penalty APR's because you have been late? If so, that may prevent any CLI or a BT card,

Message 27 of 27
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