Paying off multiple maxed cards

Anonymous · ‎12-15-2020

After a very tough year with many personal and business expenses forcing me to rack up uncomfortable levels of CC debt, I am finally in a position to payoff a significant portion of my balances when my EOY bonus hits this week (after taxes). Is there a strategy for paying off multiple maxed/near-maxed cards?

I've read about an 89/69/49/29 rule. With my bonus I could bring all balances to 29% of their CL and call it a day. I also was inclined to bring all cards down to 49 and clean off my Citi TY Premier completely since it has a rather high APR and a bit extra on my Chase Sapphire Reserve since it's my newest card and I'd like to make an effort to knock that down more than others.

Since my credit has taken a few good kicks this year, I want to focus my strategy on boosting my scores as quickly as possible. Any advice/experiences would be much appreciated.

Anonymous · ‎12-15-2020

You'll have to decide which is most important to you... Fico scores or saving on interest. If it's Fico scores, taking them all down to under 29% would be a great first step, then zeroing out them one by one either in order of smallest balance (easiest to zero out first) or highest interest rate, whichever is more important. If your goal is saving on interest, you'd want to pay off your highest interest rate cards first, working your way down the list. Somewhat of a happy medium I would say would be paying them all down below 49%, taking out a couple of high interest rate balances to $0, then moving the remaining ones down to under 29%, etc. It's really all a personal preference in terms of what matters most in your eyes.

Congratulations BTW of getting into a position where you can slay the majority of that revolving debt!

Anonymous · ‎12-15-2020

I'd take a personal loan and roll them all into that. It'll free up your recent windfall to cover any bumps in the road, and give you a definite payoff date for the debt, as it's a term loan instead of a revolving product. No chances for fees and fuzzy math to cause you to spin your wheels or worse - backslide further into debt.

Anonymous · ‎12-15-2020

The loan route is not bad advice above, as you'd no doubt secure the loan at a rate far lower than what you're paying on those cards. Also installment loan debt is nothing compared to revolving debt in the eyes of the Fico algorithm, so your scores would increase quite a bit all in one shot.

Anonymous · ‎12-15-2020

Sharp thinking. I will explore the personal loan route although I'm not certain my rate would be all that great considering the kicks to my credit this year (very high util). I'll check with my bank and see if they would offer me something worth while. I've never been a fan of paying debt with other debt, but certainly understand the benefits. Nevertheless, before I factored in how much CC debt I would pay off with the bonus, I separated a portion for savings/bumps in the road.

Anonymous · ‎12-15-2020

@Anonymous wrote:
Congratulations BTW of getting into a position where you can slay the majority of that revolving debt!

It was tough trucking for awhile, but in retrospect it forced me to really cut back in other areas of my life/spending and I haven't felt a dramatic cut to my quality of life. Now that the bleeding has stopped, I am excited to have a path forward.

Gmoney144 · ‎12-15-2020

@Anonymous wrote:
Sharp thinking. I will explore the personal loan route although I'm not certain my rate would be all that great considering the kicks to my credit this year (very high util). I'll check with my bank and see if they would offer me something worth while. I've never been a fan of paying debt with other debt, but certainly understand the benefits. Nevertheless, before I factored in how much CC debt I would pay off with the bonus, I separated a portion for savings/bumps in the road.

I took out a 10k personal loan with NFCU to consolidate debt and pay for a retaining wall. I then transferred the 10k to my Citibank Preferred at 0% for 15 months. Although I paid a 3% transfer fee ($30), it was better than the 19% interest NFCU wanted to charge. Make sure you have your ducks in a row before taking out a loan. I'm sure with Christmas around the corner there are CC companies offering 0% interest.

Business Cards

Anonymous · ‎12-15-2020

It sounds like with your bonus coming up soon that you're going to have the majority of the debt taken care of, which will dramatically drop your revolving debt and bump up your Fico scores. At that time with the greater scores you could no doubt secure a loan at a much better rate to take care of the remainder of the debt. This way it would be a much smaller loan, a little easier on the eyes. Just a thought.

Anonymous · ‎12-15-2020

@Gmoney144 wrote:
@Anonymous wrote:
Sharp thinking. I will explore the personal loan route although I'm not certain my rate would be all that great considering the kicks to my credit this year (very high util). I'll check with my bank and see if they would offer me something worth while. I've never been a fan of paying debt with other debt, but certainly understand the benefits. Nevertheless, before I factored in how much CC debt I would pay off with the bonus, I separated a portion for savings/bumps in the road.
I took out a 10k personal loan with NFCU to consolidate debt and pay for a retaining wall. I then transferred the 10k to my Citibank Preferred at 0% for 15 months. Although I paid a 3% transfer fee ($30), it was better than the 19% interest NFCU wanted to charge. Make sure you have your ducks in a row before taking out a loan. I'm sure with Christmas around the corner there are CC companies offering 0% interest.

Great thinking as well. I will consider taking a similar route.

Anonymous · ‎12-15-2020

@Anonymous wrote:
It sounds like with your bonus coming up soon that you're going to have the majority of the debt taken care of, which will dramatically drop your revolving debt and bump up your Fico scores. At that time with the greater scores you could no doubt secure a loan at a much better rate to take care of the remainder of the debt. This way it would be a much smaller loan, a little easier on the eyes. Just a thought.

That's my new plan. Thanks a million.