Which Card Do I Pay Off?

Anonymous · ‎05-10-2020

Hi everyone,

I've learned a lot about credit over the last 2 years, from folks in these forums and a few choice youtub channels, so thank you in advance for your help.

Three years ago, my credit was rather bad, and I had only one credit card. Today, I have seven cards, and my credit is hovering just under 700. My recent cards are a Discover (CL $2,750), an AMEX Everyday (CL $2,000), a Hilton AMEX (CL $1,000), the Southwest priority (most recent card; CL $10,300), and a store card (CL $4,500). All of these cards have zero balances.

My two oldest cards are both from Capital One: CL $1,750 and CL $3,500. It's these last two cards that I have a question about.

I am planning on using my economic impact payment to pay off some credit card debt, but I'm not sure which card to apply to. My oldest card (CL $1,750) is at 62% utilization, and the other Capital One card is at 91% utilization, due to having live on credit for a couple of months 2 summers ago.

Should I pay off the 62% utilized card entirely, leaving the other card at 91% utilization? Or should I apply the same amount to the other card, and have one with 62% utilization and one with 56% utilization? I want to do whatever is likely to have the highest immediate positive impact on my credit score. Any thoughts on which decision would be most beneficial? I have one more card that I need to get this summer, before I garden for the next two years.

Thank you for your assistance!

Anonymous · ‎05-10-2020

I'd payoff highest interest first... Not worth a very very small point rise to keep paying more.

You can find the thresholds for utilization by searching forum and see what will benefit your score. Your aggregate utilization is what like less than 17%? That's not that high to care about a score bump unless you want a loan.

Paying interest on your balances also negates any gains from rewards cards, so while you could be adding another card for like a $300 bonus, you'd probably benefit more from a BT and cutting on spend.

Kforce · ‎05-10-2020

@Anonymous wrote:

My two oldest cards are both from Capital One: CL $1,750 and CL $3,500. It's these last two cards that I have a question about.

My oldest card (CL $1,750) is at 62% utilization, and the other Capital One card is at 91% utilization, due to having live on credit for a couple of months 2 summers ago.

If you have have this high of utilization for a couple of years, at this time there is a very high likelihood of balance chasing.
I would pay off the oldest card if it has no annual fee, else the other card.

If both have an annual fee, the one with the higher CL.

It might be smarter to pay off other cards you want to keep rather than worrying about these two just because they are older .

They will still be on your record for 10 years

List your cards, age and balances, and what you spend on each.

Sometimes an old worthless card is not as wise as saving a worthwhile newer card

Anonymous · ‎05-11-2020

I'd pay $263 on the $1750 card to get it down to 47%. That'll get you through a scoring threshold on that card with enough headroom to stay under when interest is added. Put the rest toward the maxed out card (over 88.9% is considered maxed out, and it's hurting your scores in addition to looking really bad to lenders as a risk). That'll drop that card to 64% and not only drop you through two scoring tiers, it'll get you well away from being maxed out. You'll want to keep working it down further but it'll give you some needed breathing room.