Comments on: Paying Off Credit Card Debt http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/ Bridging the gap between saving money and investing Wed, 15 Oct 2008 22:56:21 +0000 http://wordpress.org/?v=2.6.1 By: Codeweb http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-10526 Codeweb Mon, 04 Dec 2006 04:56:32 +0000 http://www.pfadvice.com/?p=804#comment-10526 Hello All Here is the dilemma I have – hope someone can help. Credit Card 1 – American Express Blue Total Credit Line $17,000.00 APR 8.990% Debt to Credit Ratio 11.93% Credit Card 2 – Mastercard Total Credit Line $25,000.00 APR 10.990% first $12,000 - 3.990% remainder Debt to Credit Ratio 60.60% Above is what I approximately owe – I have $5,000 in savings I would not like to use (saving it in case of an emergency) – I can pay this debt off in the next 2 years. I would like to know from the experts – should I open a 0% APR credit card – I have offers for this rate for 2 years. My FICO score ranges from 736, 753, 764. Is this a good idea or not recommended – my Debt to Credit Ratio will decrease but how badly will it effect my credit. These are the only 2 credit cards I have. Thanks in advance !!! Hello All

Here is the dilemma I have – hope someone can help.

Credit Card 1 – American Express Blue
Total Credit Line $17,000.00
APR 8.990%
Debt to Credit Ratio 11.93%

Credit Card 2 – Mastercard
Total Credit Line $25,000.00
APR 10.990% first $12,000 - 3.990% remainder
Debt to Credit Ratio 60.60%

Above is what I approximately owe – I have $5,000 in savings I would not like to use (saving it in case of an emergency) – I can pay this debt off in the next 2 years.

I would like to know from the experts – should I open a 0% APR credit card – I have offers for this rate for 2 years. My FICO score ranges from 736, 753, 764.

Is this a good idea or not recommended – my Debt to Credit Ratio will decrease but how badly will it effect my credit. These are the only 2 credit cards I have.

Thanks in advance !!!

]]> By: John W http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-9386 John W Wed, 15 Nov 2006 01:32:31 +0000 http://www.pfadvice.com/?p=804#comment-9386 Excellent advice. I like the idea of a video. My comment or addition is to tell your readers to not only pay out their credit cards, but to pay before the due date. The suggestion is to pay it when the bill arrives in the mail. Why do this? Well, quite to my surprise, I have discovered that by doing this your credit score will increase faster. Just as if you continuously pay late, your score slowly drops over time, the reverse also holds true. Just a quick tip for everyone. Excellent advice.
I like the idea of a video.
My comment or addition is to tell your readers to not only pay out their credit cards, but to pay before the due date.
The suggestion is to pay it when the bill arrives in the mail.
Why do this? Well, quite to my surprise, I have discovered that by doing this your credit score will increase faster.
Just as if you continuously pay late, your score slowly drops over time, the reverse also holds true.

Just a quick tip for everyone.

]]> By: pfadvice http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-5351 pfadvice Sat, 02 Sep 2006 19:22:04 +0000 http://www.pfadvice.com/?p=804#comment-5351 I don't think there is a standard rule of thumb % since it really is dependant on your particular finances. I think what you need to do is look at all the things you want to save money for, estimate when and how much they are going to cost and then work it into a budget dividing the money toward the two as best fits your needs and goals. Just remember that all those things that you are saving money for now come with a 5.3% premium on them... I don’t think there is a standard rule of thumb % since it really is dependant on your particular finances. I think what you need to do is look at all the things you want to save money for, estimate when and how much they are going to cost and then work it into a budget dividing the money toward the two as best fits your needs and goals. Just remember that all those things that you are saving money for now come with a 5.3% premium on them…

]]> By: makingitbig http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-5279 makingitbig Wed, 30 Aug 2006 17:36:46 +0000 http://www.pfadvice.com/?p=804#comment-5279 I don't want to take this conversation too far off topic, but one of the things I'm trying to figure out is the best way to allocate the "extra" money we bring in. We have no other outstanding interest-generating debts besides the student loan, but we do want to save some money for a honeymoon, other travel, etc. Is there a suggested % of "extra" money to go toward a loan as opposed to savings? I don’t want to take this conversation too far off topic, but one of the things I’m trying to figure out is the best way to allocate the “extra” money we bring in.

We have no other outstanding interest-generating debts besides the student loan, but we do want to save some money for a honeymoon, other travel, etc. Is there a suggested % of “extra” money to go toward a loan as opposed to savings?

]]> By: Mr. Blue http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-5274 Mr. Blue Wed, 30 Aug 2006 13:53:23 +0000 http://www.pfadvice.com/?p=804#comment-5274 Here's my plan which seems to be working quite nicely. I have 24k in student debt at 3.5%, and 4k in car loan at 7.5%. NO cc debt at all. I'm paying off the car first, THEN using the $150 increase in disposable cash to put toward the student loans. For me at least, paying the highest interest debt seems to work a LOT faster. Another thing I like to do is pay 10% of the outstanding balance versus the minumum payment, you save TONs of interest that way. Here’s my plan which seems to be working quite nicely. I have 24k in student debt at 3.5%, and 4k in car loan at 7.5%. NO cc debt at all.

I’m paying off the car first, THEN using the $150 increase in disposable cash to put toward the student loans. For me at least, paying the highest interest debt seems to work a LOT faster. Another thing I like to do is pay 10% of the outstanding balance versus the minumum payment, you save TONs of interest that way.

]]> By: pfadvice http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-5272 pfadvice Wed, 30 Aug 2006 13:40:44 +0000 http://www.pfadvice.com/?p=804#comment-5272 I do see a student loan as different from credit card debt. That being said, even with your loan being at a fairly low rate, you'll still come out ahead by paying it off rather than placing the money in a savings account. You may, however, want to look at your options a little differently than if you had 18% credit card debt. With the student loan, you aren't freeing up extra credit when you pay off the loan. That means if an emergency occurs, you may have to borrow at a higher rate than you were paying off the debt (for example, if you put it on a credit card with 18% interest) Therefore, it would make sense to have an emergency fund for unexpected expenses (or at least free credit with a low interest rate). Once that is in place, I it still makes sense to pay off the loan than let extra money sit in savings in my opinion. I do see a student loan as different from credit card debt. That being said, even with your loan being at a fairly low rate, you’ll still come out ahead by paying it off rather than placing the money in a savings account. You may, however, want to look at your options a little differently than if you had 18% credit card debt.

With the student loan, you aren’t freeing up extra credit when you pay off the loan. That means if an emergency occurs, you may have to borrow at a higher rate than you were paying off the debt (for example, if you put it on a credit card with 18% interest) Therefore, it would make sense to have an emergency fund for unexpected expenses (or at least free credit with a low interest rate). Once that is in place, I it still makes sense to pay off the loan than let extra money sit in savings in my opinion.

]]> By: makingitbig http://www.pfadvice.com/2006/08/30/paying-off-credit-card-debt/#comment-5268 makingitbig Wed, 30 Aug 2006 12:24:24 +0000 http://www.pfadvice.com/?p=804#comment-5268 Jeff -- would you say this applies to school loans, too? I've got a $14k loan at a 5.30% interest rate, but I'm not 100% sure that I want to spend my extra dough on the loan instead of investing in a savings account. What do you think? Jeff — would you say this applies to school loans, too? I’ve got a $14k loan at a 5.30% interest rate, but I’m not 100% sure that I want to spend my extra dough on the loan instead of investing in a savings account.

What do you think?

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