Reducing APR

[Junejer]

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@Anonymous wrote:

I have been successful in lowering many of my CC APRs.  I have 11 cards total.  I have just paid off 5 of the highest interest cards. 

HSBC       0/2000 16.4% (was 29.9%)

Chase1    0/1000  26.9% (was 29.9%)

Chase2    0/500    26.9% (was 29.9%)

Chase3    0/700    22.7%

Old Nvy    0/1500  21.0%

Here are the remaining 6:

GM        6500/9000  17.2% (was 29.9%)

Cap1a   1324/2000  16.9%

Cap1b   5404/7500  12.9% (was 19.4%)

AmEx    1280/6500  11.9% (was 18.2%)

Citi          571/1500    6.9%

Disc      3283/5000    0.0% (intro offer then goes to 13%)

Last I checked, my EQ FICO score was 672 before paying off those top 5 cards.  I am able to pay 1100/month towards these CCs.  Any advise on a course of action?  I've owned my starter home for 3 yrs and would like to buy a bigger house around Aug 2009.

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Anony1, I submit to you that you don't need an additional card at this time. Your highest rate cards are at $0 balance. That will get their attention, as the balance stays at $0 for awhile.

With the $1100, I would concentrate on getting uti under 50% first then under 30%, under 10%, etc. You have a lot of options. But, if it were me (b/c I like the instant gratification and a good morale boost), I would payoff cap1a or citi, first. Then take the payments that would normally go from there and work my way up to the bigger balances (which may or may not be the card with the highest rate). If at all possible, I would try to put more balance on 0%, if the fees weren't exorbitant.

You will get many different opinions here. Choose the one that will fit your situation best.

BTW, you probably got a nice increase for bringing the five cards to $0 balance. Congrats.

[Anonymous]

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anony1 wrote:

I have been successful in lowering many of my CC APRs.  I have 11 cards total.  I have just paid off 5 of the highest interest cards. 

HSBC       0/2000 16.4% (was 29.9%)

Chase1    0/1000  26.9% (was 29.9%)

Chase2    0/500    26.9% (was 29.9%)

Chase3    0/700    22.7%

Old Nvy    0/1500  21.0%

Here are the remaining 6:

GM        6500/9000  17.2% (was 29.9%)

Cap1a   1324/2000  16.9%

Cap1b   5404/7500  12.9% (was 19.4%)

AmEx    1280/6500  11.9% (was 18.2%)

Citi          571/1500    6.9%

Disc      3283/5000    0.0% (intro offer then goes to 13%)

Last I checked, my EQ FICO score was 672 before paying off those top 5 cards.  I am able to pay 1100/month towards these CCs.  Any advise on a course of action?  I've owned my starter home for 3 yrs and would like to buy a bigger house around Aug 2009.

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You've done a terrific job of getting those APRs lowered!!! That is saving you $$$!

There are two schools of thought about repayment, but if you want to pay the least amount in interest overall, then pay the cards with the highest interest rates first.  So I'd throw the most you can at GM and the Cap1s.

The other method is to pay the lowest balance first (Citi) but it will take you longer and cost more to get out of the hole.

[Anonymous]

Thanks for the advice ByrdMan and Masdeocho!  I'll take the strategy of paying down two high interest cards at a time until they lower their APRs.  I will put 500/month towards GM and 250/month towards Cap1a and the minimums to the other 4 cards (Totals close to what I said 1100/month).  That should in effect bring my uti down as well.

If it were my wife paying the bills, she would likely pay down the lower balance cards first.  I am more patient than her and would rather save money in the long term.

[Anonymous]

Okay, I may need a new strategy now.  I have just landed a new job that will greatly increase my income.  It is a big move and they will provide housing for 3 months, while I look for a new house.  So, I want to sell my old house and buy a new house soon.  I only have about $12,000 for the down payment + closing, but I'm looking to buy a house around $250,000.  I bought my old house for $75,000 and plan to sell it for $85,000.  I have $60,000 left on that mortgage.  I think by selling first it should give me a decent downpayment for the new house.

Should I:

1. Save up for a bigger down payment by paying only minimums to credit card debt?
2. Stick with my current payment plan described in the previous post? or
3. Pay more to credit card debt to increase my FICO scores?

4/2/08: TU 713, EQ 683, EX 684

[Anonymous]

One thing I haven't seen mentioned is that some creditor & card combinations will never allow lower APR or substantial changes to CLI. 6 years ago I filed bankruptcy. I didn't know how credit worked so I canceled all other credit accounts. Had a FICO of about 400. To rebuild credit over next 2 years I opened a couple "poor credit" cards: Fist National Bank of Marin, CreditOne, HSBC, etc. No prime company would touch me. Ever 6 months I would try for CLI and lower APR. Nobody every lowered APR. Most would offer "token" CLI. +$100 on $550 card, +$200 on $600 card, etc. About 3 years ago I got my first hint my credit had improved. Target called me up and thanked me for being a "loyal target card user" I used it maybe twice (can only be used at Target). They offered to switch my Target card to Target Visa and boost CL from $400 to $2000. I took it. A month later Capital One sent me pre-approved offer for $5000 CC at lower APR than any of my other cards. By this time my FICO was in high 600 range. I called all the "starter" card companies. Not one would offer a APR drop and CreditOne offered a $300 CLI on $700 card that would only COST ME $69. No matter how much my credit improved those starter cards would not improve. I had cut up the cards long ago and was setup for online bill. I set ScoreWatch to notify of any balance increase. The final time I tried to check was when USAA offered me a CLI to $25K from $5K. I now have mortage (never late), only negative on my credit report is Bankruptcy, and have FICO in 720-740 range. HSBC billed me annual fee and I called them. They wouldn't remove the annual fee, reduce interest or allow a CLI increase even when I threatened to leave. I ended up closing the account. I kept the other accounts simply because they are some of my oldest accounts and I don't want to shorten my credit history or average length of credit.

[Junejer]

Anony, you are riding really close to the 680 mid score line. I would stick with the plan if I were you. You have $12M now and will have another $20M or so after the sale. That's more than 10% down on the home, plus you have three months of free housing allowing you to save up some of your new increased income. Get that CC debt under 10% and scores will rise, giving you a lower APR on your LTD.