What is the best way to handle my credit card debt?
Author: dski11
Joined: 08 Dec 2004
Posts: 2
Posted: Wed Dec 08, 2004 3:29 pm
Post subject: Tactic for handling CC debt
Hello All, I came across this forum and have gleaned some great knowledge from all your posts & responses. I'm in a situation with my debt and was hoping to get some guidance on the next step. I ended up receiving offers for cards about 6 years ago and took them, having no idea how to use a CC responsibly. So, here's where I stand today: Disc. Plat(7K limit) - $6450 balance @ 10.74% Disc. Tit.(10K limit) -$9200 balance @ 10.74% Sears MC(8.5K lim) -$8200 balance @ 28.99% A family member graciously offered me a Personal Loan so I have about $6500 to put towards this at this moment. I'm also looking at a promotion that will allow be about $500 more per month take home cash. I called Searscard and they're in the midst of some merger and therefore cannot negotiate rates until January. I was late on some payments and got nailed with that ugly rate. I'm looking for the best way to get the balance off of the MC first. I've looked a bit for new cards with free transfers & low/no intro. APR's but my debt to income ratio is so high not many will touch me, and if they will the limits are low.
My question is: How should I use the money I have on hand to get the most advantage out of it? Any suggestions are greatly appreciated.
Thank You,
dski
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Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 4:40 pm
Disc. Plat(7K limit) - $6450 balance @ 10.74% ---- 92% utilization Disc. Tit.(10K limit) -$9200 balance @ 10.74% ---- 92% utilization Sears MC(8.5K lim) -$8200 balance @ 28.99% --- 97% utilization 6500 6450 - 2000 = 4450 64% utilization 9200 - 2000 = 7200 72% utilization 8200 - 2500 = 5700 67% utilization That would be a start, then with your extra money further work to get these numbers below the 60% utilization mark... then that should put you to being able to get other offers - hopefully.
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Author: dski11
Joined: 08 Dec 2004
Posts: 2
Posted: Wed Dec 08, 2004 5:08 pm
Thank You NightStar. I see how hitting all the cards to lower the utilization looks better on my report, but as far as trying to pay the least in finance charges, would it be a bad idea to hammer on the MC first? I was told it's better to pay down the cards over a few months so it shows steady decrease and revolves into my Credit Report. Is there any truth to this? Thank You dski
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Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 6:03 pm
Yes steady payments over period of time look nice, but I am sure with the balances you have across them cards, that you have already been making payments for some time... But at this point I would not spread it out, cause you have high balances that will just keep accumilating interest over that time that you would pay. Interest is important here, I agree that if you can put all extra money as quick as possible towards that Sears card. If you had the time, and were not pushing for moving the debt quite quick, I would suggest putting all money on that Sears card, now immediately. What ever extra money you have do the same thing until it is zero balance. The interest far outweights what you are paying on the other two, and you might have that extra money freed up to put a dent in them quicker after the Sears account is done. All depends on what Sears says they can lower that interest rate to after the first, if they come down fairly decent, then I see go back to plan one and spread payments out.. if not then kill that balance just as quick as possible.
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Author: Florydory
Joined: 28 Nov 2004
Posts: 22
Location: Illinois
Posted: Wed Dec 08, 2004 6:20 pm
Quote:
I was told it's better to pay down the cards over a few months so it shows steady decrease and revolves into my Credit Report. Is there any truth to this?
I had heard the same thing and was wanting to ask the same question.............thanks Does it reflect as good credit if "WE" make consistent monthly payments on old debts that are listed on our CR? Isn't it "best" to send payments directly to the original creditor as opposed to sending them to the CA? IF NOT, then should they be paid off in any certain order?
Thanks ..............
Florydory does not like to be threatened and/or harrassed by creditors !
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Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 432
Posted: Wed Dec 08, 2004 6:42 pm
Go online to Discover and see what balance transfer offers are available to you on the two Discover cards you have. On my Discover, I'm offered 3.9% valid until April 2005, with a $50 maximum balance transfer fee. If you have that offer, pay off the $6450.00 debt completely--and overpay it by $100 or so to cover any possible interest charges before the payment date. Then wait a couple of days until your account shows the funds are available for a balance transfer. At that time, use the balance transfer to pay off the Sears card...or close to it. This method achieves the main purpose of cutting the interest you're paying on the Sears card--but also reduces the interest you're paying on Discover, for a couple of months at least. It buys you time and saves you money.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
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Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 7:02 pm
That is a great idea on the balance transfer,
Quote:
Does it reflect as good credit if "WE" make consistent monthly payments on old debts that are listed on our CR?What do you mean by old debt? meaning they went to collections? if that is the case no, negative accounts that are collection or charge off can't be made positive again no matter what, so if you have the money just pay them off. If you are referring to regular open accounts, with positive reporting, then yes long time payments over period of time helps the history portion of the scoring.
Quote:
Isn't it "best" to send payments directly to the original creditor as opposed to sending them to the CA?Yes, if the creditor STILL owns the account, otherwise they will robe you blind and leave you still owning the collection agency that owns the account. If the creditor no longer owns the account, then it is a done deal you have no choice but to pay direct to the collection agency.
Quote:
IF NOT, then should they be paid off in any certain order?If you can always get to the creditor and pay them, otherwise longer you wait, the more collection agencies pop up and report multiple to the credit reporting agency. All about damage control.
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Author: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 29 Jul 2004
Posts: 137
Posted: Wed Dec 08, 2004 8:29 pm
MY RULES...highest interest rate gets the biggest payment You have 3 accounts and can spend $500/month on them...pay $50* each on the 2 lowest interest rates and $400 on the highest *or whatever the minimum payment is There are a bunch of 0.00% BT offers all over the place if you want to try for one
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Author: quamism
Joined: 17 Nov 2004
Posts: 7
Posted: Fri Dec 10, 2004 1:16 pm
Also, with the discover card BT you can convert that to 0% for life by simply making 2 purchases a month. So, if you can get the BT and then be good about making 2 small purchases every month, you will have the $6450 at 0% untill the balance is paid off. Just ask the CSR when you are doing your BT if this offer is available to you.
View our latest credit card ratings!
Joined: 08 Dec 2004
Posts: 2
Posted: Wed Dec 08, 2004 3:29 pm
Post subject: Tactic for handling CC debt
Hello All, I came across this forum and have gleaned some great knowledge from all your posts & responses. I'm in a situation with my debt and was hoping to get some guidance on the next step. I ended up receiving offers for cards about 6 years ago and took them, having no idea how to use a CC responsibly. So, here's where I stand today: Disc. Plat(7K limit) - $6450 balance @ 10.74% Disc. Tit.(10K limit) -$9200 balance @ 10.74% Sears MC(8.5K lim) -$8200 balance @ 28.99% A family member graciously offered me a Personal Loan so I have about $6500 to put towards this at this moment. I'm also looking at a promotion that will allow be about $500 more per month take home cash. I called Searscard and they're in the midst of some merger and therefore cannot negotiate rates until January. I was late on some payments and got nailed with that ugly rate. I'm looking for the best way to get the balance off of the MC first. I've looked a bit for new cards with free transfers & low/no intro. APR's but my debt to income ratio is so high not many will touch me, and if they will the limits are low.
My question is: How should I use the money I have on hand to get the most advantage out of it? Any suggestions are greatly appreciated.
Thank You,
dski
View our latest credit card ratings!
Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 4:40 pm
Disc. Plat(7K limit) - $6450 balance @ 10.74% ---- 92% utilization Disc. Tit.(10K limit) -$9200 balance @ 10.74% ---- 92% utilization Sears MC(8.5K lim) -$8200 balance @ 28.99% --- 97% utilization 6500 6450 - 2000 = 4450 64% utilization 9200 - 2000 = 7200 72% utilization 8200 - 2500 = 5700 67% utilization That would be a start, then with your extra money further work to get these numbers below the 60% utilization mark... then that should put you to being able to get other offers - hopefully.
View our latest credit card ratings!
Author: dski11
Joined: 08 Dec 2004
Posts: 2
Posted: Wed Dec 08, 2004 5:08 pm
Thank You NightStar. I see how hitting all the cards to lower the utilization looks better on my report, but as far as trying to pay the least in finance charges, would it be a bad idea to hammer on the MC first? I was told it's better to pay down the cards over a few months so it shows steady decrease and revolves into my Credit Report. Is there any truth to this? Thank You dski
View our latest credit card ratings!
Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 6:03 pm
Yes steady payments over period of time look nice, but I am sure with the balances you have across them cards, that you have already been making payments for some time... But at this point I would not spread it out, cause you have high balances that will just keep accumilating interest over that time that you would pay. Interest is important here, I agree that if you can put all extra money as quick as possible towards that Sears card. If you had the time, and were not pushing for moving the debt quite quick, I would suggest putting all money on that Sears card, now immediately. What ever extra money you have do the same thing until it is zero balance. The interest far outweights what you are paying on the other two, and you might have that extra money freed up to put a dent in them quicker after the Sears account is done. All depends on what Sears says they can lower that interest rate to after the first, if they come down fairly decent, then I see go back to plan one and spread payments out.. if not then kill that balance just as quick as possible.
View our latest credit card ratings!
Author: Florydory
Joined: 28 Nov 2004
Posts: 22
Location: Illinois
Posted: Wed Dec 08, 2004 6:20 pm
Quote:
I was told it's better to pay down the cards over a few months so it shows steady decrease and revolves into my Credit Report. Is there any truth to this?
I had heard the same thing and was wanting to ask the same question.............thanks Does it reflect as good credit if "WE" make consistent monthly payments on old debts that are listed on our CR? Isn't it "best" to send payments directly to the original creditor as opposed to sending them to the CA? IF NOT, then should they be paid off in any certain order?
Thanks ..............
Florydory does not like to be threatened and/or harrassed by creditors !
View our latest credit card ratings!
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 432
Posted: Wed Dec 08, 2004 6:42 pm
Go online to Discover and see what balance transfer offers are available to you on the two Discover cards you have. On my Discover, I'm offered 3.9% valid until April 2005, with a $50 maximum balance transfer fee. If you have that offer, pay off the $6450.00 debt completely--and overpay it by $100 or so to cover any possible interest charges before the payment date. Then wait a couple of days until your account shows the funds are available for a balance transfer. At that time, use the balance transfer to pay off the Sears card...or close to it. This method achieves the main purpose of cutting the interest you're paying on the Sears card--but also reduces the interest you're paying on Discover, for a couple of months at least. It buys you time and saves you money.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Author: NightStar
Forum Moderator
Joined: 07 Nov 2003
Posts: 2393
Location: Illinois
Posted: Wed Dec 08, 2004 7:02 pm
That is a great idea on the balance transfer,
Quote:
Does it reflect as good credit if "WE" make consistent monthly payments on old debts that are listed on our CR?What do you mean by old debt? meaning they went to collections? if that is the case no, negative accounts that are collection or charge off can't be made positive again no matter what, so if you have the money just pay them off. If you are referring to regular open accounts, with positive reporting, then yes long time payments over period of time helps the history portion of the scoring.
Quote:
Isn't it "best" to send payments directly to the original creditor as opposed to sending them to the CA?Yes, if the creditor STILL owns the account, otherwise they will robe you blind and leave you still owning the collection agency that owns the account. If the creditor no longer owns the account, then it is a done deal you have no choice but to pay direct to the collection agency.
Quote:
IF NOT, then should they be paid off in any certain order?If you can always get to the creditor and pay them, otherwise longer you wait, the more collection agencies pop up and report multiple to the credit reporting agency. All about damage control.
View our latest credit card ratings!
Author: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 29 Jul 2004
Posts: 137
Posted: Wed Dec 08, 2004 8:29 pm
MY RULES...highest interest rate gets the biggest payment You have 3 accounts and can spend $500/month on them...pay $50* each on the 2 lowest interest rates and $400 on the highest *or whatever the minimum payment is There are a bunch of 0.00% BT offers all over the place if you want to try for one
View our latest credit card ratings!
Author: quamism
Joined: 17 Nov 2004
Posts: 7
Posted: Fri Dec 10, 2004 1:16 pm
Also, with the discover card BT you can convert that to 0% for life by simply making 2 purchases a month. So, if you can get the BT and then be good about making 2 small purchases every month, you will have the $6450 at 0% untill the balance is paid off. Just ask the CSR when you are doing your BT if this offer is available to you.
View our latest credit card ratings!
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