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Allocating Payments?

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Allocating Payments?

I have 3 maxed CCs. Two have 300 limit and one has 600 limit. I will have $600 to throw at them. Is there a preferred way to allocate the $? I can pay off the larger balance, payoff the two smaller cards, or pay $200 on all three. Any FICO benefit to one option over the others?

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Super Contributor

Re: Allocating Payments?


@Inscorehell wrote:

I have 3 maxed CCs. Two have 300 limit and one has 600 limit. I will have $600 to throw at them. Is there a preferred way to allocate the $? I can pay off the larger balance, payoff the two smaller cards, or pay $200 on all three. Any FICO benefit to one option over the others?


I would pay off the 2 smaller ones.


Total revolving limits 730000 (603500 reporting) 10/2/19 FICO 8 scores: EQ 744 TU 782 EX 746
Message 2 of 4
Valued Member

Re: Allocating Payments?

I would Dave Ramsey your debt. If you don't know who Dave Ramsey is what i'm refering to is called the snowball method in which you pay your debts in order from smallest to largest. In your situation that would mean paying off the 2 $300 limit cards (make sure you still make the minium payment on the third card so you don't hurt your credit score) and then worry about paying the last card. You asked about the FICO benefit for different ways to pay it off. Unless you need to apply for a loan soon paying off all your debts will have the greatest benefit to your peace of mind...and eventually your FICO score. 

 

 

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Super Contributor

Re: Allocating Payments?

Your first goal should be to get each card to under 48% of its credit limit.  That means something like $150, $150, and $300 -- with $300 going to the card with the highest credit limit.

 

That will get you to 50% but you will get a significant boost when all three cards are at 48% compared to 50%.

 

After that you will want to make sure you are making at least $2 more than the minimum payment on every card, with the goal of getting all CC debt paid off as fast as possible.  

 

You should also carefully scrutinize how it was that you ended up with all your cards maxxed out (looking into the past) and develop a plan for how to save a lot of money in a savings account so you will never need to carry balances on cards again (looking into the future).

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