Utilization Decision

[Anonymous]

I have a credit card with a $2800 balance out of a $10k credit line, which I'm paying 12.6% APR on. 

I have a $3200 balance on another card, which has a $3500 line that is interest free right now. 

I can apply $2400 right now to either of them. My question is, am I better off paying down the $2800 balance to $400 (which I'd prefer to do)? Or is it better to get the $3200 down to $800? This way, ALL my cards will be under 30% utilization. Which would help my FICO score more? 

Thanks.

[newhis]

Do you value more some score points or saving some money each month? Do you need/want to apply for credit?

I think having a card over 90% (3200/3500) can hurt your score, but paying interest at 12.6% is hurting your wallet.

[Anonymous]

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@Anonymous wrote:

I have a credit card with a $2800 balance out of a $10k credit line, which I'm paying 12.6% APR on. 

I have a $3200 balance on another card, which has a $3500 line that is interest free right now. 

I can apply $2400 right now to either of them. My question is, am I better off paying down the $2800 balance to $400 (which I'd prefer to do)? Or is it better to get the $3200 down to $800? This way, ALL my cards will be under 30% utilization. Which would help my FICO score more? 

Thanks.

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Hey man!  You and I have been chatting through PMs a bit so I may know a bit more about your plans than others.

My understanding is that in the next 2-4 months you plan to pay off all of your credit card debt (but continuing to charge a small amount on one card).  Is that right?

If so, then from a scoring perspective you will be getting to the same place 120 days from now regardless, and it therefore makes sense to send the bulk of your $2400 payment to the high interest card, just to save yourself the extra interest.  I would still reserve some of it for the very highly utilizaed card, just so that you are creating a clear track record of steadily paying that card down each month by far more than the minimum.payment.  For example, $2000 to the high interest card  and $400 to the nearly maxed out card, with a continuing monthly payment of at least $300 to the highly utilized card.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I have a credit card with a $2800 balance out of a $10k credit line, which I'm paying 12.6% APR on. 

I have a $3200 balance on another card, which has a $3500 line that is interest free right now. 

I can apply $2400 right now to either of them. My question is, am I better off paying down the $2800 balance to $400 (which I'd prefer to do)? Or is it better to get the $3200 down to $800? This way, ALL my cards will be under 30% utilization. Which would help my FICO score more? 

Thanks.

---

Hey man!  You and I have been chatting through PMs a bit so I may know a bit more about your plans than others.

My understanding is that in the next 2-4 months you plan to pay off all of your credit card debt (but continuing to charge a small amount on one card).  Is that right?

If so, then from a scoring perspective you will be getting to the same place 120 days from now regardless, and it therefore makes sense to send the bulk of your $2400 payment to the high interest card, just to save yourself the extra interest.  I would still reserve some of it for the very highly utilizaed card, just so that you are creating a clear track record of steadily paying that card down each month by far more than the minimum.payment.  For example, $2000 to the high interest card  and $400 to the nearly maxed out card, with a continuing monthly payment of at least $300 to the highly utilized card.

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Yes, and I sent you another PM! -lol

I see your point. Since I plan on getting everything paid off anyway, I may as well knock off the one with interest first. 

Feel free to respond to my PM at your convenienc. I guess I mainly wanted to know if I should wait until I make this $2400 payment before getting a copy from the CRAs.

Thanks,

[Anonymous]

My vote would be to pay off the balance that you are paying interest on first since you don't "need" the extra credit score points right now as you aren't planning on apping at all.