Where is it best to put $10,000.00?

from what I have been told , your balance should never be more than 20 % of your credit line if you pay down some of the balance this should drastically increase your scores.

or you could get a CL increase but for some that may not be a good thing as they get sucked into debt further.

I have also seen this same info stated on the credit bureau score maximizer web sites.

to increase your score have only a few accts with balances keep your debt ratio low, have no late payments reported and keep the inquiries to a minimum like 4 a year if possible.

all these factors determine your score. hope this helps

 

I would probably say to put an even amount towards each of them. I wouldn't put all $10,000 towards them though, if you put $3,000.00 to each, that'll give you $1,000.00 to save for the time-being.

This will lower the utilization for all of them, then when they've updated the balance on your credit reports, with the new information, then I would request a re-consideration on the interest rate increase.

If they won't re-consider the interest rate increase, then you could use that $1,000 remaining to pay down that one farther, and then keep paying anything extra you can to pay it down.

Usually, I would say put it all towards the highest rate, but in this case, since the reason it is now the highest rate is the utilization score, maybe paying a nice chunk out of each card will be enough to take the interest rate back to where it was before.

 

From what I've seen in the score reports I've looked at, utilization can be figured out many ways (and more than one at the same time, can hurt you).

Per Trade Line
As a % of total
As a $ of total

If you would pay $3,000 to each, you would free up $3,000 per trade line; $9,000 total, and drop your utilization score to 73%, but at least its not 99%. (and your highest utilization per trade line would be 80% for the 15,000 card, 70% for the 10,000 card, and 63% for the 8,000 card.)

 

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tuul | 1 posts since Aug 2004

 

I'd pay the ALL of the 27.9% rate.....8k...save the 2k for an emergency, and pay your personal max on both of the other two each month....once the 8k is paid, you can ask for an increase in limit and decrease in % for that card.....if they don't do it, sock drawer it....and don't make any more new purchases on any card til you're back in control....I'm taking my own words of advice too

 

Unfortunately, that won't help.

There are a number of posts where when the card has been paid off completely, it is either closed, or the limit is dropped.

Plus, it doesn't solve the reason WHY the rate was jacked, which can possibly lead to the other two cards getting jacked as well...

I agree, to not use any of the cards if possible; but you need to get the overall utilization in control now.

But, paying off the $8,000 card only drops the overall utilization to 76%, with two accounts maxed at 99%+.

And if the company with the $8,000 limit decreases the credit line, or closes the account when it hits a zero balance, the total utilization could still go back up to 99%+. (Both remaining accounts individually at 99%+, and a total utilization at 99%+)

Now, if they pay off $3,000 on each account, and the company with the $8,000 limit decides to drop the credit limit to $5,000; overall utilization will still be 80%, with ONLY one account maxed at 99%+.

And if the account is paid off in full, the customer loses most of the leverage, since at a zero balance any interest rate = $0.00. If the bank sees that $5,000*9.9% is better than $0*27.9%, they are more likely to work with the customer.

 

Why not pay off 8k card with 27.9% interest, pay 1k to each of the other cards, then ask the old 8k card if they are willing to lower interest rate in exchange for partial balance transfers from the other two cards. I have seen a credit card company offer as low as 4.5% for a balance transfer when they are used to 0% utilization. This will not only lower current interest and utilization but will also save you money from the higher interest I am sure you are paying on the 10k and 15k cards.

Example:

8k card - paid off
10k card - pay 1k = 9k balance
15k card pay 1k = 14k balance

8k card offers low interest rate BT

Transfer 3k from each card

8k card @ 27.9% now = 6k card at 4.5%
remaining 9k card now = 6k card
remaining 14k card now = 11k card

Total Utilization now = 71%
Total interest saved = 23.4%+

 

tuul, unfortunately all the above is just speculative, as is the following. But my best guess from experience and alot of reading is to NOT pay all on one card for the following reasons:
1. your FICO is impacted by the cumulative AND individual utilization of each card, with 90% util the last threshold measured
2. depending on who issues the 27% card, they may pull another dirty trick and significantly lower your credit which doesn't do your FICO any good
3. depending on who issues the 27% card, they may not be willing to negotiate lowering your interest rate until the card has had a much lower balance for a longer period of time
4. you want to present a good picture to all your creditors, not just one, so by paying down all 3 cards, you reduce the additional risks of the others raising your interest rates or lowering your credit limits.

So I would recommend paying the high interest card down to maybe around $2500 (thus eliminating a large chunk of the high interest balance) paying $2200 on the larger balance card and $1300 on the smaller balance card, and save the leftovers ($1000) for emergency funds. This way you are also getting your balances away from the 'danger' zone considered by creditors (that last 10%)

As stated above, ideally you want to keep all your card balances under 20%. After hitting that first threshold your FICO will fall again around 28% and again at 50%. Your FICO takes bigger hits from overall (adding all cards) utilization, and smaller hits from individual card utilization (unless all you have is one card). This I've learned from reading, and my own ongoing credit card experiences. Also, something to remember is NOT all credit cards will report true available credit limits (Cap1 etc.) and can mess up your FICO score...

 

that may not work since some creditors see this as a risk .
once you pay off the card they may close the acct or lower your cl as jam suggested it may hurt you.

also, I have personally seen one card paid off and the fico drop, because there is no payment history left to report each month so keeping a small balance is good.

I personally would pay $3 K on each and save the 1k for emergencies. put it in savings acct

you can use it if needed to help you pay on the monthly payments.


besides you really need to watch balance transfers the Interest rate is for an introductory period only so if you don't pay it off or down during that time the rate jumps up making matters worse.

jam has a excellent point

I agree with him

good luck

 

You don't have to use all the money right now either, I'd just hate seeing a someone throwing away money at that rate....possibly, pay down 3,000 on the monster card and hold off on the rest....see if you can get the rate dropped, limit increased etc.

or pay 3k, 1k, 1,.....then you'll have 5k left to figure out your next move...

good luck with whatever you decide

 

If you are only worried about score, you've been given good advice. If, however, you want to pay your debt off faster, then you'll pay the entire 27% card, put all of the rest on the next highest interest rate. Then pay what you were paying on the 27% card each month AND what you were paying on the second highest card on that card. When it's paid, then add the amount you were paying there to the amount you were paying on the third card. You'll see overall progress faster that way.

Any extra money you get ALWAYS goes on the highest interest rate.

If you can, get a second job for a year or so. EVERY PENNY from that job goes on the highest interest rate.

It may not maximize score right now, but over the long haul it will, because you'll be paying your total faster. If you pay a card at, say, 12% and another is accruing interest at 27%, your overall debt will keep increasing. By paying everything you can on the highest rate card, the balances will get down faster.

If you can get increases in limits on the other cards, that will help them. If you can still get another card and do a balance transfer, that will help as well. But each month, whichever card has the highest rate at that time always gets all the extra money.

 

I'd pay all the money on the debt. If you keep it, how much will you make on it? You have to look at what you're paying against what you're making. Pay off debts. If you have to borrow later, you're in a better position to get lower rates. Even if you get the same rates, there will be a period of time that you AREN'T paying that rate.

If you want to increase wealth, you always put your money where it makes the most. Paying off 27% is like "earning" the 27%--you don't have to pay it, and it's not there growing (debt) at a compounded rate.

 

Close the account! If you did not default, you are allowed to close the account and it will stay at the lower apr. You will continue to make payments at the lower apr but cannot use your card. I would call them and close it asap. Not sure if its too late.

 

some creditors will not close the acct until 1) its paid off or 2) its lost/stolen 3) you default

and if they close the acct it doesn't help the fico score or stop the interest from accruing.

 

fun is correct. And some credit cards are set up that if you close the account, the APR immediately goes to some high rate, often the default rate. Be VERY CAREFUL closing accounts that aren't paid off. And, as has been pointed out, leaving it open improves your ratios. Closing it removes that credit limit from the usage ratio computation.

 

Re: Where is it best to put $10,000

Ok well your first mistake here is a critical one. You never ever take out a second mortgage to payoff a unsecured debt. You just now took on a second mortgage for a credit card. The reason it's so bad because in your future if you miss a payment on that second mortgage they can make the full amount due. If you cannot meet that obligation you just lost your house to foreclosure.