$35K to pay off cc's - how should I disburse?

[tydaddy]

I am currently doing a refi and taking $35K out to pay off cards. Presently my balances are as follows:

Amex Gold - $17,300

Amex Blue - $10,000 (maxed out)

Chase - $6,000 (maxed out)

Personal Line of Credit - $5700 ($8000 limit)

Best Buy - $2100 ($5000 limit)

Sears - $400 ($3000 limit)

The interest rate on all are high. I would like to hit both Amex's and the Chase. Would it be better to pay a few off in whole or spread the pay-offs b/w all cards to get my debt-to-ratio lower? Also - does anyone know if Amex will take 95% of total owed as paid in full?

Please advise as to the best way of splitting payments up and increasing my score. I have to get back to my broker today with the payoff amounts.

Thank you!

[elyse449]

But you didn't list what your interest rates are. It would be helpful if you knew those. Are you on time with all of these as well?

Here's my vote;

AMEX and Chase are prime cards, pay on those first.

AMEX GOLD 17,300 (pay all-leave acct open)

AMEX BLUE 10,000 (pay all-leave acct open)

CHASE 6,000 (pay all-leave acct open)

This will bring that ratio to an excellent level. You should have 2,000 left over...pay on Bestbuy 1,000 and 1,000 towards the personal line of credit--or pay the remaining to the personal line of credit since you owe more to them... Your Sears looks just fine as does your personal line of credit.

And whatever you do, never, never max these out again. Remember-you want that utilization low. Never use more than 50% of your CL....or whatever that "magic" pecentage is, I think I saw 35% tossed around a bit to.

Not to add confusion--but you could always pay LESS on one of the AMEX's to pay MORE towards your personal line of credit. Honestly though, I'd shoot for the prime cards first.

Elyse

[tydaddy]

Thanks Elysse.

My interest on them are:

Amex Gold - 18%

Amex Blue - 7.9%

Chase - 27%

Beneficial Line of Credit - 27%

Best Buy - 22%

Sears - 22%

I'm thinking of paying the Amex Gold off in its entirety and the Beneficial off since it is a high interest rate as well. I'll pay most of the Blue off but leave a small balance and see if I can pay 1/2 of the Chase off so that I can negotiate a lower interest pmt.

Was on the phone with Amex earlier and the Blue was actually at 30% and they lowered it to 7.9% when I talked to them about making a large payment. Yay! I think I will try the same with Chase - leave a small balance and get them to lower my interest rate. After that - I'm hoping my score will increase and I can negotiate with the others for a low interest rate so I can get them paid off.

If you have any new suggestions as to how to disburse the $ now that you have that info - let me know.

Happy St. Pat's Day to you too - my son was born on that day so of course I am partial. My wee little Brady will be 3 yrs old this Sat.

Thanks again!

[petr3772]

i think its 30% to get bonus points on your credit... under 10% maxes out your positive points from a givin card

[someonesomewhere]

Here's my 2 cents worth.

Call Chase first since they have the highest interest card. Tell the person on the phone that you're going to pay them off in full, and is there anything they can do to reduce the interest rate. It's a polite threat, so be polite, but firm.

Depending upon how good of a deal they offer, if any, they move down on your list. If for example Chase offers you 9% for 6 months, take it. If they don't budge, then they get PIF.

Work your way thru them from highest to lowest interest rate. One or more of them is bound to budge and give you a break on the interest, at least for 3 to 6 months.

After any deals you get, this gives you a prioritized list of which one is costing you the most money in interest. Pay the highest ones first, of course.

If you're already talked to your broker and told him to whom he should cut checks, do this little exercise anyway. You have nothing to lose except high interest rates.

Once they get paid, what can they do to hurt you since you perhaps implied you'd let the balance ride, but then paid it off anyway? Nothing except raise your interest rate on a $0 balance.

[IHateCAs]

You can pay off everything except the personal line of credit ($35,800). After that, you'd ideally want a nice 6-12month no interest BT offer on the Amex Blue. Even if you couldn't get that, a straight BT will give an interest rate much better than the 27% you're paying on the LOC.

Cut up all your cards so you don't go crazy again.

[tydaddy]

Ok so I'm a little confused.

What is a BT?

I spoke to Chase earlier and they said they do NOT give any payoff amounts AND I am NOT eligible for any reduced interest. My credit limit is $100 over the limit so she said that they MAY consider it once I get under the limit. I, of course, told her I would call back and speak to a manager to get the help I needed.

I really don't want that line of credit opened at 27% so think that I should probably pay that down.

Is it better to pay all my cards down so I have lower utilization or should I start by paying a few off in their entirety and then trying to switch the remaining balance or cards to a lower interest rate card?

I did not give my balances to the broker yet. Will give them the info tomorrow once I figure it all out.

[IHateCAs]

BT = balance transfer. I think my idea is the best.

Pay off all the cards.

Use the Amex Blue to pay off the LOC via BT. You'll be paying off $5700 at the lowest rate your cards offer.

Don't incur more debt.

I guess that's a little convoluted.

Use the money to pay off everything except Amex Blue.

You'll have about $5k left over.

Use that to cut your Amex Blue balance in half.

Don't incur more debt.

The reason I mentioned the convoluted way was because of BT offers from your bank. For instance, I could get a 3.99% APR BT offer from Citi right now. So instead of paying the usual rate, I get a super low rate until the balance is paid off. So using the convoluted method I mentioned first, you end up with the same balances on the same card, but with a lower rate on the Amex. This all assumes you can get a good BT offer.

[tydaddy]

so would you suggest asking Amex Blue if I could get a 0% BT offer or wait to see if I get one in the mail from another company?

Basically - the idea is to see if I could get a low interest rate BT from one of the cards I currently have and pay off what I can with the refi $. Then whatever balance I have on the remaining card should be transfered to a low rate BT card.

I currently have an offer from BofA for a 0% offer - should I pursue that or use that to my advantage when requesting the rate with the cards I already have.

Thanks for the info. This helps in keeping my scores in tact. Our goal is to have an EXCELLENT rating so that we can move into a bigger house next year and get a great mortgage rate.

I'll let you know how I fare with Amex Blue & Chase tomorrow.

[someonesomewhere]

If my math is right, you've got $41.5K in CC debt and $35K from the refi.

How much is BOA offered at 0%? If it's at least $6.5K, then you can do a $6.5K BT to BOA and the $35K from your refi will cover the rest.

If Amex Blue will give you say an additional $5K BT 0% offer, that's $5K of home equity you won't have to tap. Although, perhaps a better idea would be to take that $5K, put it in a 6-12 month CD (depending upon the length of the 0% offer), and when the interest rate jumps ya cash in the CD and pay off that CC.

Others have suggested leaving about a $100 on each CC when doing the BTs, and pay them off over about 3 months. Then close those you don't want. Looks better on FICO scores. I don't pretend to fully understand the why behind it.

Minimum monthly payments or a little more on the CCs for 3 months, 0% interest debt with minimum payments, and the money in a CD to PIF the debt on the 0% CCs when the rate jumps. I think that might be a good plan.

[tydaddy]

You rule! Thanks so much for your advice. I kept getting the BoA offers but never applied. Won't it look bad that I am applying for more credit with the refi taking place?

Please clarify the % to leave on cards and pay off to boost credit score. You mentioned leaving a small balance on cards and paying off in full w/in 3 months. Does it have to be 3 months or can it be w/in 6? Also how small of a balance should I leave?

I will do the footwork tomorrow and see what I come up with. I'll let you know.

Thanks again!!! Will touch base manana.

[someonesomewhere]

Are you already approved for your refi? Talk to your broker. If you are, then go for the BOA offer. Once approved for your refi, BOA pulling your report and issuing you a card won't affect the refi.

I was reading the forums earlier today, and I found a thread with a post by Admin about this. Cannot find it right now searching.

My layman understanding of the issue is that if you do a BT off a card, and then close it, that can trigger a ding to your FICO score that you are "rate shopping". But, by leaving about a $100 on each card, and then pay that off over 3 months (around $35 a month, per card), it tends to hide your "rate shopper" status. [i'm hoping someone more knowledgeable and with more details can jump in.]

3 months sounded like the minimum time Kristy recommended. 6 months should be better. $100 per card should be good.

6 cards, $35 a month, $210 a month total, paid off in 3 months.

6 cards, $25 a month, $150 a month total, paid off in 6 months.

Thereabouts.

[IHateCAs]

The BOA isn't even an offer. It's an offer to apply for their card. You aren't guaranteed to get the card with a high enough limit to do what you want. When they see your report with full balances on everything, I'd wager they'd be a tad bit concerned. I'd just call Amex and see what they can offer you as you'd like to use the blue card to BT from your other cards.

If nothing, do it the simple way I outlined (pay off everything except Amex Blue.. pay off Amex Blue with anything left over).

If they offer you a CLI and a nice rate, do it the convoluted way I suggested.

[mspzcpmom]

I am pretty anti HEL or HELOC to pay off consumer debt but you are already doing it so I won't get on my soapbox.

I would suggest that you lock those cards in a box so that you don't find yourself in the same position again. Too many people pay off debt with a HEL/refinance to only find themselves back in credit card debt.

[tydaddy]

BoA is for a pre-qualified card up to $7495 for 1.9% BT until September 2007. This one expired at the end of Jan but I know I have another one here for March. They send them to me every month.

Now if I need to leave balances on one or more of the cards then it is within my best interest to leave them at 30% to get the max FICO score, correct? On cards that I am transferring to BT - I need to leave $100 on there and pay them off in 3 months to also increase my score (?).

I need to call in the amounts today. I'm not sure if I'm approved or not - they did the appraisal and I have escrow papers so I assume everything is being processed. BTW - how much should closing costs be? They are telling me it should be around $5K or maybe a little less. Is this standard? My sister-in-law is doing the loan (changed careers and it's her first loan with the new co.). The last broker that did ours was a college friend from my husband and I recall their rate being much lower than that.

I agree cards are going in a safe place so that we do not use them again. Off to call Chase and Amex Blue and let you know what offers I get.

Thanks everyone! Great peace of mind to be directed by people who know the game.

[elyse449]

You rule! Thanks so much for your advice. I kept getting the BoA offers but never applied. Won't it look bad that I am applying for more credit with the refi taking place?

Please clarify the % to leave on cards and pay off to boost credit score. You mentioned leaving a small balance on cards and paying off in full w/in 3 months. Does it have to be 3 months or can it be w/in 6? Also how small of a balance should I leave?

I will do the footwork tomorrow and see what I come up with. I'll let you know.

Thanks again!!! Will touch base manana.

If you apply for more credit, it WILL look bad on the refi. Sorry. This much I do know. It seems a bit much to muck around with balance transfers, no offense. Keep it simple. If you can negotiate the interest--do it because that'll save you money in the longer run. If you can't, just pay them off and leave it. Doing a balance transfer just shifts the ****. Sorry, but it does. Granted, after you refi it'd be nice to go w/ a CC company that WILL offer you a lower rate...but intro rates expire, see what the rate later would be.

I wouldn't do a bunch of that while you're trying to qualify for a refi. You had the right idea by paying a lot of them off.

Remember-you have to do what's best for YOU. People here just give their thoughts and while to them they may be "the best" you must remember, they/we are not you.

Good luck. And Happy Birthday to your child!!!

Elyse

[someonesomewhere]

Just be sure to talk with your broker and be sure you're approved for the refi BEFORE applying for BOA or any other additional credit.

Since the BOA offer is good thru September, you might want to keep it in a safe place for now.

Like IHateCAs said, cut up the cards you pay off leaving $100 on them. In 3 to 6 months, cancel those you intend to get rid of. Maybe keep the Blue and the Chase cards. If Chase won't budge on the interest, even after you pay off everything but a $100, then I'd go ahead and apply for BOA in July or August and close Chase.

Leave yourself the Blue and one VISA/MC. You can always cut the Blue and your Chase in half, and in 4-6 months if you're feeling certain about your commitment to keep the debt off, call 'em and say "I lost my card, can you issue me a new one?"

[elyse449]

Thanks Elysse.

My interest on them are:

Amex Gold - 18% - 17,300

Amex Blue - 7.9% - 10,000

Chase - 27% - 6,000

Beneficial Line of Credit - 27% - 5700.00 (8,000 limit)

Best Buy - 22% - 2100.00 (5,000 limit)

Sears - 22% (3,000 limit)

I'm thinking of paying the Amex Gold off in its entirety and the Beneficial off since it is a high interest rate as well. I'll pay most of the Blue off but leave a small balance and see if I can pay 1/2 of the Chase off so that I can negotiate a lower interest pmt.

Was on the phone with Amex earlier and the Blue was actually at 30% and they lowered it to 7.9% when I talked to them about making a large payment. Yay! I think I will try the same with Chase - leave a small balance and get them to lower my interest rate. After that - I'm hoping my score will increase and I can negotiate with the others for a low interest rate so I can get them paid off.

If you have any new suggestions as to how to disburse the $ now that you have that info - let me know.

Happy St. Pat's Day to you too - my son was born on that day so of course I am partial. My wee little Brady will be 3 yrs old this Sat.

Thanks again!

Hi there,

Ok-I'm not a big proponent of BT's (sorry) and certainly not in the middle of a refi deal. But here are my thoughts...for whatever they're worth...

If Chase will not change your interest rate, pay them in full. Do not close the acct, this will ding your FICO. So--as frustrating as it must be, try to relax. In the grand scheme of things, this is ok.

I edited your quoted post to include the amounts. I didn't go after your line of credit or Sears because your utilization on those looks good. But since their interest rates are so high--I figured you'd save money if you paid them sooner, rather than later. And I got ya down to 30% utilization to give you some wiggle room on your credit reports. No reason to get SO close to the edge.

So...

Payments are to the right...

CHASE (PIF) Pay 6,000

Beneficial line of credit (PIF) Pay 5,700

AMEX Gold (pay down to utilization of 30%) Pay 12,000 (roughly)

Sears (PIF) Pay 400.00

Best Buy (%) Pay 600.00

AMEX Blue (pay down to 30% utilization) Pay 7,000 (roughly)

Total; 31,700

Apply remaining amount to whatever your heart desires, preferably the higher interest rates. You will maximize your FICO this way, IMHO. When you make your CC payments, make sure you always pay MORE than the minimum payment. ALWAYS pay on time, NEVER go over your limit. For me, if I owe 15.00 for a min payment, I pay 20.00 or 25.00 or whatever it is I can afford...and get this, I just paid one cc off.

AFTER YOU REFINANCE...consider BT's on the remaining balances on your cards IF you want/need a better rate.

That's my 2 cents. Sorry--I'm a "keep it simple" kinda gal. If you have more time to do this, I would throw my vote in with what the other posters had to say on BT's because at least you could wait out your credit score. It'd dip at first due to opening new line of credit, and if you closed on card--it'd dip again, etc--and as the months went on your FICO would rise again and THAN you could go for it...but you are getting these funds because you're cashing out from a REFI. So...anyway. I just don't see the point in shifting the crap. Good luck though. And my wee little James will be 3 yrs old in June!

Elyse

[tydaddy]

ok - found the recent BoA offer - it is for 0% bt until Jan 08. It states my pre-qualified credit line up to $7,495 has been confirmed. Meaning WHAT? Should I apply?

Just called Chase and again they will not do ANYTHING until I get the amount under the limit. I am $165 over. They said even if I pay the account off then there is no guarantee that they can get me a lower rate. Whatever!

Thus far I am thinking of disbursing it this way:

1. Amex Gold - pay all of but $1,000 (have a $3200 pmt due now so balance would be $14K instead of $17K)

2. Amex Blue - pay $8K and leave $2,000 balance

3. Chase - pay $5500 - leave $500 balance

4. Beneficial - pay entire amount off - $8,000 (the balance is actually $8K - forget to add the $ my dh used).

All in all that would leave me with $1,000 left over - which my husband needs to pay for one of his classes for school next month.

Should I go ahead and apply for the BoA for the 0% offer now or wait until after the refi? I'm assuming if I pay the above - my scores should increase and I should be able to qualify for more 0% BT options.

Let me know if you think the latest is the best plan. Thank you! Thank you!

[tydaddy]

ok sent the last post before I saw the other suggestions. Again - I am interested in keeping my FICO as high as it can be b/c we are looking to buy another house by within the next year. If something comes up - we would like to be in a position to qualify for a low rate. My dh credit is not good so we have been surviving on mine the last few years. All loans are in my name, house, car, credit cards, etc. It is my goal to pay off all the rest of our cards before we move so I'm hoping to do that in the next 6-12 months.

So with that in mind - what is the best pay off method? My dh has a Discover in his name for $4500 - $1500 over the limit but negative reporting. He wants to put some $ towards that right now but I think it's better to concentrate on the ones I have on my report so I can get the good score. When that happens - we can transfer his amount to one of my cards and get it paid off. What do you guys think?

Thanks!

[elyse449]

ok sent the last post before I saw the other suggestions. Again - I am interested in keeping my FICO as high as it can be b/c we are looking to buy another house by within the next year. If something comes up - we would like to be in a position to qualify for a low rate. My dh credit is not good so we have been surviving on mine the last few years. All loans are in my name, house, car, credit cards, etc. It is my goal to pay off all the rest of our cards before we move so I'm hoping to do that in the next 6-12 months.

So with that in mind - what is the best pay off method? My dh has a Discover in his name for $4500 - $1500 over the limit but negative reporting. He wants to put some $ towards that right now but I think it's better to concentrate on the ones I have on my report so I can get the good score. When that happens - we can transfer his amount to one of my cards and get it paid off. What do you guys think?

Thanks!

Are you the main wage earner? If so, than concentrate on your credit. If not, my personal opinion is (based on my last suggestion) is you could easily afford to use the remaining funds (which is 3300.00) and get your dh good and below his CL. By then you'll have your refi so any BT and new credit line won't hurt ya at all...your FICO would easily ZOOM right back up next year in time to buy the home you mentioned wanting. So, that's my 2 cents. Oh and as far as Chase goes, I'd go ahead and give them the 165.00 to get myself below the CL and save myself some overlimit fees...than if they don't play ball with ya, you can decide accordingly...but either way, you'd save yourself those fees.

As far as the Bestbuy, you're saying that one is now maxed out to??

I know this isn't any of my business, but obviously you're the one that's good w/ money at your house--has he agreed to stop this sort of spending? Have you both made strides to change your overall spending habits?? I'd just hate to see you get this all squared away and than in 2-3 yrs time be right back where ya started and with a HELOC to pay to boot, that's all. And you're saying he wants even MORE money for schooling?

Elyse

[tydaddy]

No Best Buy is not maxed out. My limit is $5K and we owe $2000 on it.

The reason we are in this situation is that I had my 3rd child last year and was on bedrest towards the end of the pregnancy and have not been back to work since. Childcare out here is incredibly expensive and for me to go back to work and pay daycare costs for 3 children does not make any sense. I essentially would be working to pay for daycare. So our cc's ran up and now I'm doing contract work from home and my husband is in the middle of getting his Masters so he has 2 online classes that we need to pay for in the next 3 months = $2K. He just did not want to add anything else to our cards and thought we should hold back some of that to pay it off.

At any rate - I'm just trying to do what's best for both of us in the long run. I have alot of work to do on his cr's. He has many lates from long ago and too much stuff to clean up so we have just been surviving on mine for now. I plan on working on his this year so that he can qualify with me when we go in together for the next house.

So that's the story. I will try to stick to paying off as much as I can on the cards and keep low balances on the ones that aren't completely paid off. My score went from 726 to 680 b/c everything was in my name and my balances were too high. I'm hoping this might give it the jump it needs if I get my cc's taken care of.

[elyse449]

No Best Buy is not maxed out. My limit is $5K and we owe $2000 on it.

The reason we are in this situation is that I had my 3rd child last year and was on bedrest towards the end of the pregnancy and have not been back to work since. Childcare out here is incredibly expensive and for me to go back to work and pay daycare costs for 3 children does not make any sense. I essentially would be working to pay for daycare. So our cc's ran up and now I'm doing contract work from home and my husband is in the middle of getting his Masters so he has 2 online classes that we need to pay for in the next 3 months = $2K. He just did not want to add anything else to our cards and thought we should hold back some of that to pay it off.

At any rate - I'm just trying to do what's best for both of us in the long run. I have alot of work to do on his cr's. He has many lates from long ago and too much stuff to clean up so we have just been surviving on mine for now. I plan on working on his this year so that he can qualify with me when we go in together for the next house.

So that's the story. I will try to stick to paying off as much as I can on the cards and keep low balances on the ones that aren't completely paid off. My score went from 726 to 680 b/c everything was in my name and my balances were too high. I'm hoping this might give it the jump it needs if I get my cc's taken care of.

Best buy isn't maxed out? Ok, I guess I misunderstood. I saw another response you'd given and you said you'd "forgotten" that dh had used some of the credit line on something...and I understand all too well about paying for child care! ALL three children in full day child care? I couldn't imagine. I have 4 kids in full day school--but two that are just turned 5 yrs (preschool at our church,but that's only pt) and a soon to be 3 yr old.

My gosh, I'm starting on the road to going back to work myself and it's tough!! I don't even know how to write a cover letter!!! I can't market myself when I've been out of work for SO long. (I got laid off from Boeing)

I think the most common mistake though is--going from TWO incomes, to one and than still LIVING like you got two!! LOL. Not that YOU folks are, but it's something I've seen time and again. Are you truly wanting to return to work? Have you two tried looking at what funds you're actually bringing in to see what all you can afford? Where to cut back? Etc...that's what we had to do. With our situation, my dh and I agreed that I'd stay home for awhile..but we realized this meant some financial sacrifices. Heck...we sacrifice no matter what we do, huh?

Elyse

[tydaddy]

Elyse ~

Thanks for the advice.

Good Luck getting back into the workforce. You shouldn't have any problems finding a good position. There is a large demographic of career women who took time off to stay home with their children and get back into the game after a few years. I come from an HR background and know that as long as you have the required skills and can perform the job - companies are glad to have you. THere are all kinds of sample cover letters you can find online. Just type in cover letters under a search engine and you should find tons of links to getting prepared to get back in the workforce. I also used to be an Executive Recruiter so there are all kinds of ways that you can present your skill set, even after taking time off, and still look like an outstanding hire. If you also type in Moms getting back into the workforce in a search engine - it should point you to sites where they have loads of advice and suggestions to get you on track.

I'm happy to help if you have any ?'s. Feel free to ask anytime.

I'm signing off for the evening. Will be back manana.

[nascar]

If you have any new suggestions as to how to disburse the $ now that you have that info - let me know.

If you're looking for ways to get rid of 30k, I' be happy to help you with that.