Racer's Lounge - Paying off credit cards??




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TN94Z
03-12-2008, 10:05 AM
I have two credit cards. The one with the highest balance is 11.99%. The second one is 0% until November. I have enough money to pay off the 0% card right now, but I know that you are supposed to pay off the higher rate cards first. Should I just save up until I get enough to pay off the high rate one, or go ahead and pay off the no interest card now and put that payment toward the high rate one?


Tudds
03-12-2008, 10:09 AM
Why not take what you have now and put it towards the high balance one?

DirtyJohn
03-12-2008, 10:11 AM
I'm starting to warm up on the idea of transferring balances to the 0% cards to avoid interest payments. Then paying off is all principal payments. I'm in the market for a professional financial consultant though and I haven't seen one yet so take that for what its worth.


TN94Z
03-12-2008, 10:41 AM
Why not take what you have now and put it towards the high balance one?

That's my question. Should I put that money toward the high rate card or should I completely pay off the 0% card?

I'm starting to warm up on the idea of transferring balances to the 0% cards to avoid interest payments. Then paying off is all principal payments. I'm in the market for a professional financial consultant though and I haven't seen one yet so take that for what its worth.

The only thing about doing this a lot is that it hurts your credit. Every time you apply for another card over short periods of time, your credit takes a good hit. That is what I read on a "good credit how to."

Tudds
03-12-2008, 10:42 AM
the 0% doesnt cost you anything, why would you pick that one over one that you have a higher balance and are paying money towards?

jay_dub87
03-12-2008, 10:47 AM
I have two credit cards. The one with the highest balance is 11.99%. The second one is 0% until November. I have enough money to pay off the 0% card right now, but I know that you are supposed to pay off the higher rate cards first. Should I just save up until I get enough to pay off the high rate one, or go ahead and pay off the no interest card now and put that payment toward the high rate one?

depends. I have a goodyear card and its 0% interest and no payments for 6 months.... however..... if you dont pay that off within the 6 months, the interest (23%!!!!!) will come back and bite you in the ass....

I'd say pay off the 0 interest one.....

TN94Z
03-12-2008, 10:53 AM
the 0% doesnt cost you anything, why would you pick that one over one that you have a higher balance and are paying money towards?

The only reason is because I can pay it off completely, plus another no interest bill completely compared to just paying some on my high rate card. I don't care which one I do, I just want to make sure I am using the money in the best way.

Gimp98TNT
03-12-2008, 11:04 AM
That's my question. Should I put that money toward the high rate card or should I completely pay off the 0% card?



The only thing about doing this a lot is that it hurts your credit. Every time you apply for another card over short periods of time, your credit takes a good hit. That is what I read on a "good credit how to."

I do that shit all the time and my credits Mint, i think a credit card company wrote that shit you read. LOL

jay_dub87
03-12-2008, 11:07 AM
my credit kinda blows.... Best Buy saw me coming lol

TN94Z
03-12-2008, 11:08 AM
I have seen the hit first hand. It won't destroy your credit but it will knock some points off. I have a high credit rating also...and I keep an eye on it. I have a family member that does the credit card shuffle and he showed me where it knocked his score down some.

TN94Z
03-12-2008, 11:09 AM
my credit kinda blows.... Best Buy saw me coming lol

Speaking of best buy...I just bought a plasma flat panel with no interest for 3 years!!! Talking about borrowing money for free!

DirtyJohn
03-12-2008, 11:32 AM
I have a family member that does the credit card shuffle and he showed me where it knocked his score down some.Was it a temporary hit and how significant I wonder?
I've heard a couple people testify the drop is "negligible" and temporary.
Who knows, I should prob wait till I talk to a professional.

TN94Z
03-12-2008, 11:41 AM
Yeah, I would talk to someone because I am by no means a professional. It has been a while but I don't remember it being that big of a hit. I don't know about the temp thing...that could be true. I would like to know this myself.

jay_dub87
03-12-2008, 11:44 AM
Speaking of best buy...I just bought a plasma flat panel with no interest for 3 years!!! Talking about borrowing money for free!

damn!! 3 years? that's pretty impressive.

TN94Z
03-12-2008, 11:46 AM
I know. I couldn't resist. It was for 3 days a couple of weeks ago.

TXZ28LS1
03-12-2008, 12:02 PM
just pay off the one with the highest balance.

z28boy
03-12-2008, 12:03 PM
I would Give Dave Ramsey a call he seems to have the best advice when it comes to those dam credit cards.:nod:

Jakes Dad
03-12-2008, 12:35 PM
To a point. Debt to income, the amount of credit you have, like a 25K line of credit with a 0 balance isn't good. Banks are looking for a history. A history of having credit and paying your bills on time.

AGSAOMAHD's

FirehawkNS
03-12-2008, 12:55 PM
Put it towards the one with interest. And put what you have now, don't wait till you have enough.

TN94Z
03-12-2008, 02:15 PM
Thanks guys. I am going to go ahead and pay it on the high rate card and get it paid off. I should have it paid off in about 2 months. At least that high rate will be gone. Thanks again. Some good advice here.

The Alchemist
03-12-2008, 02:28 PM
LIke mentioned earlier, a lot of the 0% percent interest 'teasers' have a catch that all remaining balances will be hit with a finance charge from date of inception if not paid in full at the end time of the introductory rate. So all of a sudden you go from a $1000 balance on a 0.0% credit card to $1400-1600 because you failed to pay off the balance.

I only charge what I can pay off at the end of the month. I have actually made money on my two credit cards for the past 8+ years because of the reward points. I haven't paid interest on a credit card in that 8+ year span.

My suggestion, cut out everything you don't absolutely need for the next 3-6 months and knock out as much debt as possible. This includes internet, drop down to basic cable, don't eat out etc in order to get rid of credit card debt. It's part of what is killing this country's economy. People borrowing way more than they can afford to pay back.

Scoggin Dickey
03-12-2008, 02:34 PM
Pay off the one with interest using the card with 0% interest. Then apply all of your money to one card that doesn't charge interest anyways

TN94Z
03-12-2008, 02:41 PM
It's part of what is killing this country's economy. People borrowing way more than they can afford to pay back

That is getting kind of personal. I don't know if that was directed at me or not, but you need to watch how you word stuff. This has nothing to do with paying more money than I can pay back. I have no problems paying what I owe...I just have a lump some now that I am going to pay. As far as killing the economy....I'm sure I help it out as much as you!

TN94Z
03-12-2008, 03:05 PM
Just thought I would throw this up. It is from Dave Ramsey's site:

Why should I pay off my smallest debt first?
This question refers to the Debt Snowball - paying off your debts smallest to largest, according to the balance and irrelevant of the interest rate. Why is this? Well, getting out of debt is very much like losing weight. It is an emotional decision. You get out of debt when you get MAD! If it took you 6 months to lose the first pound, would you stick to that diet? No. Paying off the smallest debt first allows you to get some immediate, positive feedback and encourages you to keep going. Once the debts start getting paid off, it is addicting, and you will stick with it.



What is the Debt Snowball?
The Debt Snowball is the process Dave suggests using to pay off debt. Here’s how it works: list your debts in descending order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs. In this case, list the higher interest rate debt first.

Pay the minimum payments on all of your debts. After you’ve paid the necessities and minimum payments for the month, put any and all money left over onto the smallest debt. Attack the smallest debt and get that thing paid off as quickly as possible. Once that smallest debt is paid off, move on to the next smallest debt and start making extra payments on that one. You now have more dispensable income because you have one less debt. Just like a snowball gets bigger as it rolls downhill, that’s what is going to happen to your Debt Snowball when you use this method!

transamfreak01
03-12-2008, 05:35 PM
pay ur minimum on ur 0%. then with the rest of the money put it towards ur other 1 b/c then ull hav to pay less interest on that card

SchultzLT1
03-12-2008, 05:42 PM
Just thought I would throw this up. It is from Dave Ramsey's site:

Thats fucking retarded.

Pay off the things with the higher interest first to avoid paying more than you necessarily have to. So if I have 3 card, 1 with 3% interest and $400, 1 with 5% interest and $700 and 1 with 11% interest and $1000..... why would you care about 3% on $400? You don't. Get rid of high interest debt ASAP!

Now about jumping CC's hurting your score. This all depends, if you have to APPLY for the card it will hurt your score since they are logging a check on your credit. Now what I do... You know how you get those pre-approved offers in the mail? Thats what you wanna do. If you take those, they already know your credit, your already approved and all you have to do is say yes give this to me.

Basically it hurts your credit anytime you give permission for somebody to run your credit, like when getting a load, applying for a credit card, buying a car, etc.

Keep a check on your credit score and make sure just to spend responsibly.

-Schultz

TN94Z
03-12-2008, 07:11 PM
I see what you are saying. The thing I am worried about is taking all of the money and paying it on the high rate card...then when the 0% is up in November, it won't be paid off and then the interest will probably hit at 20% for the entire time. I think that Dave Ramsey is basically saying to do this for a mental positive.

john563
03-12-2008, 07:26 PM
Here is my .02 I'm in your same situation. One of my cc is 0% for a year and the other is 10% fixed. I put $200 a month on the %0 and huge payment on the one with 10% interest. Now when the one with 10% interest is almost paid they usually send me a check to pay off other debts at 0% for one year than back to the %10 if it is not paid in a year,or another optional check they give me is 3% til paid. I pit one cc against another I never have to close an account or reopen a new card all the time. Basically I use the checks for a low interest loan or a Interest free loan. Do I charge alot of things sure. I'll be honest this is not a cheap hobby,but I have a great credit rating(over 800 last I checked),and so with that I'm able to buy what I want and when it piles high the other card will send me a check to pay the other guy off at 0% for one year,and if its close to a year and its not paid I can always bank on the other cc to send me a check for the same deal.

The Alchemist
03-12-2008, 07:30 PM
I wasn't trying to make it personal, I was just saying that it can be a vicous cycle of using one credit card to pay off another. Part of the problem is the credit cards willing to give people way too much credit. Case in point is college kids with no source of income. You can get a $5000 credit limit with no job, you simply put that you are a student and they'll give you at least that amount. And trust me, it's an addictive cycle. When I graduated college I had over $6000 in debt and nothing to really show for it.

All I was saying is be careful and focus on clearing credit card debt and avoiding it in the future.

NateLS1
03-12-2008, 07:51 PM
When should you close a credit card account? I am trying to consolidate my credit card debt, but wasnt sure if I should close the credit cards I am paying off because I need good credit history?

SchultzLT1
03-12-2008, 09:35 PM
When should you close a credit card account? I am trying to consolidate my credit card debt, but wasnt sure if I should close the credit cards I am paying off because I need good credit history?

You should close a credit card for a couple reasons:

1. You use it more than you should
2. The balance is already too high
3. The interest it too high
4. You don't use it anymore

Many times I will transfer balances onto a card and not even activate the card. Or as soon as I use one for awhile, I deactivate it and pay it off.

If spending becomes infectious because of a certain card in your wallet. Take it out and cut it up. I recently had to do this because I was using it to buy things I didn't need and it was just getting me in trouble. It will be paid off next month.

I have had credit cards for 3 years and I have never paid interest. My credit rating is well in the 700's.

EDIT: If you have an abundance of money and you never use a credit card, take an offer for 0% for a year and go out and put a cam in your car. You will have a year to pay ~$1500 which is less than $150 a month and it will allow you to continue building your credit history without putting you in trouble. NOTE: Do this only if you have no real need for a CC and if you have an extra ~$300 a month. Many times very rich people have the worst credit because they don't use credit, they just pay in debit and cash or bank transfer. You don't need to be in debt to build credit. You just need to have an amount running with a CC company.

jay_dub87
03-12-2008, 11:53 PM
you might just wanna ask your bank.... I talked to mine and they gave me a credit card through them to pay off the high interest ones.... worked out great because it took care of my best buy credit card... i was paying I think 15% interest for that card, but now through the bank the interest is 4%.... I think your bank would know more about this stuff then any of us.... just throwin that out there.

but I seriously wish you the best of luck. I constantly worry about my credit... I work at US Cellular and run credit checks on people every day who want a phone....and it seems like i'm coming across more and more people who require deposits because of their crappy credit....

credit scores are a big deal these days.

TN94Z
03-13-2008, 08:20 AM
Okay guys...I paid it on the high rate card. I figure in doing that, I can have it paid off in the next two months. Then I will do what I need to to get the no interest card paid off by November so the high rate don't hit it. I think this was the smartest move. I had always heard that you are supposed to pay off the high interest stuff first but reading the Ramsey stuff and some other things got me a little confused. I use my card very wisely but a divorce can leave you with things you don't expect if you know what I mean!! Thanks for the help.

chino_man279
03-13-2008, 11:21 PM
If you can have both cards cleared by November(when your 0% runs out), then you did the right thing in paying it all towards the high rate card. The other option, if both cards cannot be cleared in this time frame, would have been to figure all your monthly payments on the 0% card, while paying the minimum payments(typically 1.9% to 2.5% of the balance, easy to figure and in your card-holder agreement.) through October. Then making sure you have the remainder to clear the card on your November statement. After figuring this total you would have subtracted it from your lump sum of current cash and used the remainder to pay on your high interest card now.
This way you pay the most you can afford at the current time on the high interest card while still making absolutely sure that the other card would have been payed off at the end of the low interest term.

Gaunt's_Girl
03-14-2008, 12:06 AM
I'm a teller at chase and I highly recommend that you talk to a personal banker at your bank. They are Awesome and can really help you with all your financial decisions. They are very personal and really do want to help :D
In my opinion, I say pay off the 11.99% interest, THEN your 0% interest. Just make sure you have enough money to pay of your 0% interest by the time November rolls around

john563
03-14-2008, 08:24 AM
I'm a teller at chase and I highly recommend that you talk to a personal banker at your bank. They are Awesome and can really help you with all your financial decisions. They are very personal and really do want to help :D
In my opinion, I say pay off the 11.99% interest, THEN your 0% interest. Just make sure you have enough money to pay of your 0% interest by the time November rolls around

Chase for the win
One of my mortgages is through them,and I have a Credit card through them. They are always giving me the checks(credit card) for %0 for x amount of time or 2% for balance transfers. I use them to pay off other cards and pay them off and little to no interest. I had a tenant who wrote me a bad check and Chase notified me asap. Their service is awsome!!!

TN94Z
03-14-2008, 08:58 AM
I have a chase card too. I can get this paidoff within the next month or two now. And if I don't get the 0% card paid off by Novemeber, I will just move over to my chase because they are always sending me letters about 0% on balance transfers. So it shoudln't be a problem.

Unstang
03-14-2008, 10:38 AM
You know how you get those pre-approved offers in the mail? Thats what you wanna do. If you take those, they already know your credit, your already approved and all you have to do is say yes give this to me.


This is not 100% true. I used to work for a very large credit card provider & know for a fact that "pre approved" direct mail applications do not guarantee that you get the card.

BobDoLe
03-14-2008, 12:06 PM
just get another credit card, run that up with mods and drag out the large credit balances.
then use that high credit card debt as incentive to make more money... eventually inflation will hit and you'll marvel over how cheap mods were (and the value of your debt will decrease). when you can afford to dig yourself out of a hole, you'll be able to afford 3 6th generation camaros.

or you could just pay off the "0% interest" (aka 24% waiting to creep up on you like a savage ninja with 6-12 months of fatal accumulated deferred interest) NOW then work on the other card.

TN94Z
03-14-2008, 01:05 PM
just get another credit card, run that up with mods and drag out the large credit balances.
then use that high credit card debt as incentive to make more money... eventually inflation will hit and you'll marvel over how cheap mods were (and the value of your debt will decrease). when you can afford to dig yourself out of a hole, you'll be able to afford 3 6th generation camaros.

or you could just pay off the "0% interest" (aka 24% waiting to creep up on you like a savage ninja with 6-12 months of fatal accumulated deferred interest) NOW then work on the other card.


I have already paid on the high interest card with a plan to pay the other off before that interest hits. And by the way, the debt wasn't from mods....if it was, my car wouldn't have been down for a year now. I got a divorce and was left with this....thanks for the replies

Criticism need not apply!!!

FirehawkNS
03-14-2008, 01:25 PM
In a related story, I got my bonus yesterday and I got 4 credit cards paid off and half of the 5th one paid down. What's left on the 5th one is 0% for another 10 months. Only one was important to get paid as at the end of the month $968 in deferred interest was going to come back and bite me if I didn't. Always watch those 0% deals.

Unstang
03-14-2008, 02:43 PM
0% for the life of the balance FTMFW!!!!

horist
03-14-2008, 03:08 PM
0% for the life of the balance FTMFW!!!!

Discover card?

And I agree, the 0% are great so long as you can pay them off in time.

I got some 0% checks the other day, so I'm going to write myself one for a grand next month to cover part of the additional money the feds want... then 250/month for 4 months isn't too bad