Need help with what to pay off first

[mom2dea0813]

Ok we have 2 credit cards left to pay off . I need some help on what to do :

Dh got 800.00 bonus (After taxes , tithe and 10% into savings ) We could pay off one whole credit card.BUT I was told that its better to have all your credit cards under the 50% owe line . Meaning if you have a credit line of 1000.00 you shouldn't owe more then 500.00 on the card . We were told this for credit rating for the most part.
So Dh wants me to put 300 towards one card to get it under that line and 500 towards the other card to get it under that . Or I could take the full 800 and have a whole card paid off . What should I do ?

Thanks for your Opionons.

Also I think we have a 0% transfer also on the card that we can pay off in full so I am then wondering if I should transfer the balance of the other card to the then paid off card. I know I need to find out when it needs to paid off to not have a Extra high intrest rate on that transfer and such but just thinking out loud here .

Sarah M

 

[nephthys43]

according to creditboards.com you should always carry a small balance. that way other credit agencies can assume they'll make money off of you.

 

[EthansMom]

Personally, I would put all of the extra money toward the credit card on which you are paying interest. That way you are "making" the most money for your "investment" of debt repayment.

If you're working toward getting your debts paid off completely, then I wouldn't worry too much about trying to get the amounts on just two cards below 50%. Eventually, you'll have both cards paid off and having them below 50% would be a moot point.

I'm assuming you have some emergency savings put away. If not, I'd split the extra money between emergency savings and the credit card on which you are paying interest.

 

[disneyatl]

Pay towards the credit card carrying the highest interest rate first. I agree with the above poster, don't worry so much at the 50% thing. You'll eventually have them both paid off. Also, when you pay the credit card off, don't cancel the card. Credit reports look at your total credit line on all open accounts to rate your score. If you were planning on cancelling it, just cut it up or put it in a drawer, not your wallet.

 

[Jon99]

Unless you are planning on applying for new credit, it shouldn't matter what you pay off first or how you do it..

 

[mom2dea0813]

Nope not canceling ... Just trying to get them paid off . But we are also trying to get our credit score raised as with in a few monthes we will be trying for a home . So we want the most of our credit score jump as well as knowing things are paid if that makes sence .

Maybe I will go post this on the creditboards as well .

Thanks to everyone that has already responded

 

[Chicago526]

If what you say about the 0% offer is true, then I'd pay off the card with the 0% offer, then transfer your other card to get the 0%, and then pay that off ASAP, hopefully before the 0% offer expires, if you can. This would cost you the least amount in interest and therefore should allow you to pay off both cards the fastest.

 

[mom2dea0813]

OK here is more details ;

#1 card has a limit of 1000.00 we have 800.00 on the card and the intrest is 15% .

#2 card has a limit of 1000.00 we have 900.00 on the card and the intrest is 14%

The #1 card has a special for transfer amount at 0% So I was thinking I could pay it all off and then transfer 450 dallors fromt he other card to the 0% card . I could have that 450 paid off by March /April at the latest .

Meaning I would have Cut intrest out of the picture for #1 card and I got them both under the 50% rate. And cut half of the intrest rate for #2 card as well .

Dose this sound to good to be true ?

Sarah

 

[tinaluis]

Just make sure you give yourself enough time to get the balance on the first card down to $0 before you attempt a transfer or they will apply any new payments to the 0% transfer balance before they will apply them to your existing balance. You have to wipe the slate clean (by paying off the card before making the transfer) to avoid this.

 

[feedindy]

First you need to look into any transaction fees involved in a balance transfer-some companies treat it like a cash advance and charge a fee which could end up costing you more than the a few more months of interest on the other card.

If that all works out to be nothing or less than the interest on card #2 would cost you, I would pay off #1 completely, verify the payment went through and then transfer the entire balance of #2. It doesn't make sense to carry an interest bearing balance just to get a tiny bump in your credit score. Mostly they are looking to see that you can manage your money. High balance to limit ratios show that you don't pay off very well, that's where the 50% figure comes in.

If you want to carry a balance for a credit score, the cheapest way is to pay them all off first and then choose one to use solely for regular monthly expenses you already pay in cash-gas for example. Charge them all on the card and pay it off each month so you don't pay interest. This way you will show that you are carrying a balance and manage it well, but it isn't costing you extra to do so.

 

[nowellsl]

OK here is more details ;

#1 card has a limit of 1000.00 we have 800.00 on the card and the intrest is 15% .

#2 card has a limit of 1000.00 we have 900.00 on the card and the intrest is 14%

So you have $2000 available credit which you are currently utilizing 85% of. If you pay off $800 (on either card or some on both) you will still have $2000 of available credit but you are only utilizing 45%. You are now below the 50% utilization. I think they look at the total picture, not each individual card. (I'm not positive but that's what I have gathered from information I've read).

 

[mom2dea0813]

So you have $2000 available credit which you are currently utilizing 85% of. If you pay off $800 (on either card or some on both) you will still have $2000 of available credit but you are only utilizing 45%. You are now below the 50% utilization. I think they look at the total picture, not each individual card. (I'm not positive but that's what I have gathered from information I've read).

That would be great I wish I knew if this was the case cause I would just pay one completly off .

 

[Bren's Mom]

My understanding from creditboards is that FICO looks at EACH tradeline's utilization, not all as a combined total. So if you have just one card at 90% utilization that's going to hurt you. However, the best scores to be had are at 30% utilization and under...so you may not see a big score jump until you hit below that.

 

[nowellsl]

That would be great I wish I knew if this was the case cause I would just pay one completly off .

I just looked on myfico.com and there's a downloadable booklet entitled Understanding your FICO score. Some good info there. It's still not crystal clear to me, but it sounds like they look at "the amount owed on all accounts, and on different types of accounts". They also look at how many of your open accounts have balances. I would pay off one and get the other paid as quickly as possible. If the 0% balance transfer doesn't involve a transfer fee I would definately do that.

 

[seashoreCM]

Pay off the highest interest rate balance first.

If one credit card has both an 0% balance and (for other charged purchases) a non-0% balance, in practically all cases you must pay both off in order for the non-0% balance to go away.

You need to compute a composite or average interest rate for the credit card with both a 0% balance and a non-0% balance. This is the number you compare with in chooseing whether to pay off this card or a different card first.

Disney hints:
http://members.aol.com/ajaynejr/disney.htm

 

[MiniGirl]

according to creditboards.com you should always carry a small balance. that way other credit agencies can assume they'll make money off of you.

I'm sorry, but I disagree with this. We pay off our cards in full every month, and we would never pay for the "priviledge" of using a cc -- which carrying a small balance would mean. If by credit agencies, you mean the agencies/banks issuing the cards, they still make plenty of money off us because the merchant pays a fee each time we use our card there. We still receive numerous offers each week for new cc, so I don't think we'd ever have a problem getting a card.

I'm sorry if you don't mean the banks and are referring to some other credit agency. However, I still believe people who use their cards but carry no balance will always be able to get credit.

 

[seashoreCM]

according to creditboards.com you should always carry a small balance. that way other credit agencies can assume they'll make money off of you.

No, no, no.

If you can pay off the balance and avoid all finance charges, then pay off the balance and avoid all finance charges.

If you cannot pay off the balance each month, well, we might not be able to help that, but you should then think twice about each additional purchase you charge.

 

[Golf4food]

First you need to look into any transaction fees involved in a balance transfer-some companies treat it like a cash advance and charge a fee which could end up costing you more than the a few more months of interest on the other card.

If that all works out to be nothing or less than the interest on card #2 would cost you, I would pay off #1 completely, verify the payment went through and then transfer the entire balance of #2. It doesn't make sense to carry an interest bearing balance just to get a tiny bump in your credit score. Mostly they are looking to see that you can manage your money. High balance to limit ratios show that you don't pay off very well, that's where the 50% figure comes in.

If you want to carry a balance for a credit score, the cheapest way is to pay them all off first and then choose one to use solely for regular monthly expenses you already pay in cash-gas for example. Charge them all on the card and pay it off each month so you don't pay interest. This way you will show that you are carrying a balance and manage it well, but it isn't costing you extra to do so.

The above is the correct advice. Follow it. If you are wanting to buy a house, a zero CC balance (even on only one card) is going to look a lot better for your credit score than two cards just barely under 50%. Pay off the 1st completely and transfer the other balance IN FULL for 0% interest and pay it off as soon as you possibly can. If there is a transfer fee, just figure up how much interest you would be paying on card two before you pay it off and then calculate how much the fee would be. If the fee is less, transfer the balance. If the fee is greater, do NOT transfer anything from card two and instead just pay it off as soon as possible.

Finally... cut one of them up or freeze it in a block of ice and forget about it unless there is a REAL emergency.

If you can't manage credit card debt, you probably should really truly hold off on that house - they are expensive (and not just in up front costs!) Get a handle on the cards first.

 

[Mari annie]

If you have alot of credit card debt you should consider debt consoldation, only thing you have to cut up/get rid of all your cards.
Best thing we ever did our entire marriage!
Instead of paying off debts of 5o years, they put you in a budget and it's like a 25.00 monthly matience fee, and it's only going to 4 take years, it's already been 2.5 years and I can't tell you the RELIEF** we both have, we had almost 40,000.00 in credit card debt(yes we were very very bad), most of the credit card companies have taken away the interest rates and the other two were lowered from nearly 30 percent to 8 to 5 percent. It depends on the credit companies, consumer credit counciling negotiates for you with these companies.
This is good if you have alot of debt.**

Good luck to you!

Pixie dust and may all your dreams come true!!!

PS Make sure you really check out the credit card consoladators, some are no good, the one we use is Consumer Credit Counciling, Services, they have been around from the 50's. You can go to any of the websites and read about the companies or call them, we did alot of research they were the best, very professional, everything done over the phone, they send you everything via the (snail mail) no sure what states they service.