What's the best plan of action?

[Lindahfx]

We are building a plan to reduce our debt. We have over $13K in cc debt. I recently applied and received a cc at 0% interest for 1 year. I transferred over 2 cc amounts to this card - it totals about $6K. And my other key cc's balance is $6700. We have minimal balances on a few other cc's that will be paid off this month. The interest rate of the second cc is as follows:

$2600 at 5.9%
$2950 at $12.9%

Q1 - Should I have moved this balance over to the 0% interest card? I have enough credit limit to do it. I worry that by moving it over to the 0% card, we definitely won't have it paid off by the end of the year and then I won't have the lower interest rates to rely on.

Q2 - If the answer to 1 is NO, which one should we focus on paying off first? The balances are about the same... I thought that we should focus on the 0% interest cc as after the 1 year it increases to 19%. But what should be the approach?

[zetta]

Although I don't personally have experience with this (I'm sure others who do will chime in with advice), the thought that occurs to me is to move over as much as you can to the 0% card, but don't close the 2nd card. When the 0% card is about to revert to 19%, transfer the remaining balance back to the card with the lowest rate (or better yet, shop around for another 0% card.) It's your choice whether you want to attack the highest rate or the smallest balance first. (Attacking the highest rate minimizes the interest charges you pay, while many people are more motivated by the satisfaction of seeing card after card wiped out quicker when they attack the smallest balance. If your smallest balance is the one at the highest rate you get the best of both worlds.)

If you are willing to tell us the amount you can devote to debt reduction each month, and list the following for all your cards, the folks here can come up with a detailed plan.

current balance, credit limit, minimum payment, current interest rate, future interest rate and date it changes

[disneysteve]

Originally Posted by zetta

the thought that occurs to me is to move over as much as you can to the 0% card, but don't close the 2nd card. When the 0% card is about to revert to 19%, transfer the remaining balance back to the card with the lowest rate (or better yet, shop around for another 0% card.)

This sounds good to me. Keep as much as you can at 0% for as long as you can and pay it off as aggressively as possible.

Originally Posted by disneysteve

aggressively

aggressively



AGGRESSIVELY!!!!




it was the choice I made and I'm eternally grateful I did, if not I'd likely have just finished up that garbage earlier this year.

[zetta]

As to the OP's question, do you guys recommend paying off the 0% card first or the (currently) higher rate cards? I'd say go after the other cards first.

[anonymous_saver]

Would you be able to pay off the $2950 card at $12.9% off in the next year before your 0% rate card goes up to 19%? If not, how much will you be able to pay off?

Depending on how much you can pay off in the next year, determines what my suggestions would be.

Plus, you may get another 0% offer after the year is up...

[Broken Arrow]

Originally Posted by rexdart

aggressively



AGGRESSIVELY!!!!




it was the choice I made and I'm eternally grateful I did, if not I'd likely have just finished up that garbage earlier this year.

Hehe, so... are you saying that it should be paid off... aggressively? I'm not too clear on that point.

[jIM_Ohio]

if you can pay off the 12.9% in the one year, while making minimum payments on the 0% card, that is best solution.

Once you get one 0% card, other offers usually follow. This assumes you keep a good credit score and make required payments.

[Ima saver]

I agree with the others, pay off the 12.9% first, then transfer the balance on the 0 % card when the time is up.

[Lindahfx]

Thanks for all of your responses. A point of clarification... the amounts of $2600 at 5.9% and 2950 at 12.9% are on the same card. (they made a special offer at one point). So, any payments made on that card are applied to the 5.9% amount first. After that is paid off, payments will be applied to the 12.9% amount.

I think you are correct, I should move everything over to the 0% cc so that no interest accumulates until then.

As for the current picture:

Card Balance Credit Limit C. Int. Rate F. Int. Rate Date Change

Visa $ 222 $13,000 19.5 N/A N/A
MC #1 $ 96 $ 9,200 18.5 N/A N/A
MC#2 $6,743 $ 6,743 12.9 & 5.9 N/A N/A
AMEX $ 226 $11,700 18.5 N/A N/A
MBNA $6,318 $20,000 0.0 19.9 3/08
Sears $ 0 ? 28.8 N/A N/A
X $ 0 $750 28.8 N/A N/A

NOTES:

- as per my notes above, MC#2 has 2 rates on 2 balances - pymts will apply to the lower int. rate amount until paid off
- most if not all of the small balance cc's should be paid off this month

[Ini_g]

I agree too, first pay the 12%

We need to think well the things with the credits, looks like they are mortal traps!

[anonymous_saver]

Originally Posted by Lindahfx

Thanks for all of your responses. A point of clarification... the amounts of $2600 at 5.9% and 2950 at 12.9% are on the same card. (they made a special offer at one point). So, any payments made on that card are applied to the 5.9% amount first. After that is paid off, payments will be applied to the 12.9% amount.

I think you are correct, I should move everything over to the 0% cc so that no interest accumulates until then.

As for the current picture:

Card Balance Credit Limit C. Int. Rate F. Int. Rate Date Change

Visa $ 222 $13,000 19.5 N/A N/A
MC #1 $ 96 $ 9,200 18.5 N/A N/A
MC#2 $6,743 $ 6,743 12.9 & 5.9 N/A N/A
AMEX $ 226 $11,700 18.5 N/A N/A
MBNA $6,318 $20,000 0.0 19.9 3/08
Sears $ 0 ? 28.8 N/A N/A
X $ 0 $750 28.8 N/A N/A

NOTES:

- as per my notes above, MC#2 has 2 rates on 2 balances - pymts will apply to the lower int. rate amount until paid off
- most if not all of the small balance cc's should be paid off this month

I would pay them off in this order (will paying the minimum due on others!):
[With the first three cards I listed, I would not even bother to try to transfer those to 0% cards since the balances are so low and the fees for transfering the balances would likely not be worth it.]

(1) Visa Card
(2) MC #1
(3) AMEX
(4) MC #2 until MBNA starts charging you 19.9% interest (and if you don't get another 0% offer).

I'm assuming you can get through (1)-(3) fairly quickly. I would suggest living very cheaply for the next year to try to pay of one of the other cards as well. Having this many cards with debt on them is probably very stressful and confusing at times.

I would also try to figure out what your limit is on your Sears card, it would be good for you to know.

[Lindahfx]

Thanks for the feedback.

Yes, I expect that all of the small balance cards will be paid off this month. And once I have the balance of MC#2 transferred over to MBNA, it will be the only card with a carryover balance. That will be the one card we attack to pay off. The other cc's may have small items put on them now and again but will be paid off each month. As for the Sears account, I just didn't have the information on me at the time I wrote my post but I'm quite sure that it is $2000. I will double check though.

[Ini_g]

If you can move the max mount of money to interest 0%, this is the best, because, you Know, the growing cancer of a credit is the interest.