@Chris - this is what I got when I first clicked on this in my alerts. WTF?
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Paying off credit debt
Need some advice from some others on paying off credit debt, just a bit unsure on my thoughts on the smartest way to go about it from a credit score #...
By 03coloradowrangler
Sep 14, 2023 09:43 PM
4 min. read
Need some advice from some others on paying off credit debt, just a bit unsure on my thoughts on the smartest way to go about it from a credit score # benefit standpoint.
card #1 has the lowest total balance with lowest APR (credit union card).
card #2 has highest total balance with significantly higher APR (amazon Chase card).
I currently have funding to totally pay off card #2 and also pay down about %70 of card #1's debt. I believe the absolute smartest method here is to get rid of the highest APR first obviously.
Using card #2 as a example, does it benefit my credit score any way to totally pay it off in signifiant large chunks for 2-3 months or should I just do a one time lump sum payment all at once and forget about it?
feel like im overthinking this whole credit score business number game.
I used to stop at Cabelas and get 20% off coupons for doing credit apps. I always paid cash for everything so I had no credit. Saved a lot of money doing that.
Finally needed a credit card and Walmart was the only one i could get.
Hard to rent apartments with no credit.
I just got a new CC that is 0% for 21 months on balance transfers. Rolled my high interest card on to it and can have it paid off in 12 if I want. I have the cash to pay it off, but this way I get to keep my cash and it doesn't cost me any interest. And when its paid off Ill get rid of it
Slightly different take…
1) Open another credit card with a zero balance transfer for 18-21 months. One of these is probably good.
https://www.cnbc.com/select/best-balance-transfer-credit-cards/
2) transfer both the balances to the new CC, this let’s you stop paying interest for the next 18-21mo.
3) do the math on the 70% you could put down and spread that over the length of you interest free transfer + you regular take home pay so you can come up with a payment schedule that lets you make regular interest free payments while 1) not adding to CC debt for regular purchases and 2) lets you keep a rainy day fund.
Caveat being you’ve got to have the discipline to not add more CC charges.
Bonus is you will get the benefit of your old cards reporting being paid off and less utilization + the new limit of the transfer card will also reduce the overall utilization and increase your score.
P.S. if you need a short term credit score bump, you can ask your existing cards for a no hard pull credit line increase to reduce your overall utilization.
Last edited: Yesterday at 7:48 PM
I did just that when I was younger, in fact I took the 1 year promo offers and paid them off with other promo offers when they were getting ready to expire. You have to read the fine print carefully though, on most of them if you make one late payment they'll charge you for all the interest from day one. It really makes a big difference when there is no interest eating into your payments every month.
Interest is what keeps working folks from ever getting anywhere. I once knew a very successful German guy, I can still hear him as he was pointing his finger and saying "don't pay zee interest, let zumbody elze pay zee interest". He was right.
Thank you for the suggestions and input.
My balance isnt astronomically high or anything, My concerns are that I work for a home builder and we all know the housing market is getting financially tough, though we are still signing contracts for new holes to be dug in the ground. theres just less going in and id rather be financially prepared to cover my debts when I can rather than shit hit the fan and have a "now what" kind of situation.
Ive got plans in line if the market falls out but luckily our home buyers are all for the most part aging out retirees downsizing, moving closer to to the medical facilities in town & paying cash.
Not totally on topic but get rid of the credit card debt and don't fall into that trap again!! I am debt free except for a car payment and it feels good. I know people will get on here and say "but you can use them wisely to earn points/save money" and that's fine if you are disciplined with money. I am not disciplined.