Credit card/loan debt question

[Anonymous]

Hello everybody. I am seeking advice on what would be the best way to attack my debt.
Over the last 5 years or so, I have accrued quite a bit of debt. Overall, I would say that my total debt between credit cards and person loans is around $35,000. Here is how it breaks down with credit used and total limits.

Capital One Venture Card - $9,800/$10,000
Discover It Card- $4,063/$4,100
Elan Financial Card- $1,950/$2,000
Navy Federal Platinum Card- $3,950/$4,000
Southwest Premier Card- $2,500/4,000
Chase Freedom Card- $450/$500
Lending Club Personal Loan- $5600 left/$10,000
Rock Valley CU Personal Loan- $5,500 left/$8,000
ABD CU Personal Loan- $2,600 left/ $3,000

I have a bonus I will be receiving from my job of around $4,500, and will be attempting to pay some of my debt with it. But have no clue as to which debt to attack first. All of my cards have around the same APR of 25% besides navy federal, which is 12.79%. My Lending club Loan is at 32% APR, Rock Valley and ABD loans around 13%.

I am thinking of paying off Discover and waiting for a possible cli, as they usually give me one when my balance is low, and hoping they offer me a low interest balance transfer. Would this be the best route to go?

[Anonymous]

Discover is very unlikely to give you a CLI with your debts so high. 

Your best course of action with your cards so high is to pay off as many of them as possible. 

I would pay the $500 Chase and $1950 Elan in full and then maybe pay some of your other cards below the 88.9% maxed out threshold but at this point I would be concerned that as soon as you do that, your limits will just get slashed and max you out again (which is why I suggested just paying off cards instead of working to bring them below max but you can try this route as well) so maybe just put that last ~$2000 towards that crazy high interest loan or even consider all of it going towards that crazy high interest loan. 

[CreditInspired]

Hi @silkdadadd
If it were me, I would put the entire $4,500 toward LendingTree. 32% APR is outlandish! $149/mo of your payment is interest. And after getting it down to 1,100, I would pay the largest amount monthly possible to get that paid off.

Once that’s paid off, use those monies to get Chase paid off.

Then do the same thing on the other 25% APR cards. Rinse and repeat.

Of course, the main thing is to stop using your cards.

GL2U.

[Anonymous]

Thank you. I was originally thinking the same thing, and then changed my mind. Now I am at a point where I just have no clue. But, what you are saying does make sense though. That Lending Tree loan is costing me around 408$/month!

[Anonymous]

I would honestly knock out the Lending Tree loan ASAP because with your cards so high, I’m not sure that you won’t have CLD and potential closures as you pay them down. 

[RobertEG]

There is no firm answer.

It is a decision between whether to reduce balances, and thus accrual of interest, or to improve credit score.

Take, for example, a high interest loan.

Paying will reduce overall interest paid, and thus represent a substantial cash savings, but paying down installment loans does not have significaant impact on credit score.  

While both the current % util of revolving accounts and the current remaining balance of installment loans as a percent of original loan amount are part of the scoring under the util of credit category, Fair Isaac has clearly stated, and anecdotal experiences confirm, that % util of revolving debt has substantially higher scoring impact than % balance remaining for installment loans.

Paying down revolving util is almost always preferable in improving credit score ,but may not always be the best financial decision as it relates to total interest paid.

[FlaDude]

Unless you have an urgent short term need to maximize your score, I'm with the camp that says pay the loan and let the credit score be a longer term project.

You suggested the loan payment was $408/month, that would leave three payments after applying your bonus money. From there, you can use that extra $400 against the lowest balances to show some progress, and reduce your monthly mininum even more, or at least have enough cushion so that you aren't continuing to charge monthly expenses on your cards. 

[hernaemm90]

You should probably Dave Ramsey your debt (I'm taking about the snowball method).