Payoff three big CC balances or spread it out to bring util down?

[Anonymous]

Hello,

Just recieved a bonus from work and would like to pay off some cc's.  My score is at 710 now, I have 30k in cc debt and am able to payoff 15k this week. 

My question is should I payoff my three cards that are basically maxed out besides one, spending the 15k?  Or would it be better to bring the utilization of these three cards, and three others below 30%?  Wondering which path to take with the goal of boosting my score as much as possible.  Appreciate the feedback!

Thanks,

Robert

[Anonymous]

For me, the most important consideration here is APR. I'd pay off the costliest balances first and continue from there. I'm sure there's a more nuanced answer forthcoming, but that seems like the most prudent way to go about it IMO.

[HeavenOhio]

Welcome, @Anonymous.

Maxed out cards are bad, and a single maxed out card can tank your score. If you can bring them below 30% (defined as 28.9% or below), that would be the much better alternative. Actually, you'd want to pay to about 27% so the next month's interest charge won't bump you back over the 28.9% threshold.

If scoring isn't the top priority and you'd rather save money on interest, pay each card down to 67% (safely below the 68.9% threshold, which will hopefully avoid balance chasing). Then put the rest of the money toward the highest interest card.

[Anonymous]

I totally agree and the obvious answer is to pay off the high APR cards.  But my goal is to boost my score, in order to get a better rate on a mortgage in a few months and am willing to pay the extra interest for a few months given I plan to payoff all debt soon.

[Anonymous]

Two common methods are the debt snowball vs avalanch method. Using the debt snowball method you pay off the loans with the smallest balances first. With the avalanch method, you focus on paying off the cards with the highest interest rates thus saving you the most money. It sounds like you have your mind made up and want to achieve the best possible credit score.  

[Anonymous]

Ok here is what I would look at doing if I were you. I would take the 15k and pay down the highest apr card. If I had any money left over I would then apply it to the next highest apr. Then I would take the leftover - sounds like 15k? - and get a debt consolidation loan to pay it all off. I used Prosper and got a 36mo 15k loan at 9.99%. That was better than the 24.8% or what ever I was paying on the other cards. My credit utilization rate went from 50% to 0%. My credit score went from 660 to 710 in a few months after the dust had settled and the credit agencies had reported all the payoffs and the new personal loan. You can ofcourse payoff the personal loan early if you have the means to do so. But I think this would option has more pros than cons. 

Just my two cents...............

[HeavenOhio]

The OP is looking at a mortgage in the near future. It'd be preferable to avoid a new account if at all possible.

[FireMedic1]

Heres hoping it isnt one of the balance chaser companies. Good Luck!