How Should I Repay My Credit Cards?

[sweeps]

Re: How Should I Repay My Credit Cards?

not going to add anymore to the credit cards

Famous last words.

[acezz4e_tish]

Re: How Should I Repay My Credit Cards?

i would say that if you can pay a double payment or close to it, do it, you will save the interest off the rest that went on the principal each payment. say your revolving payment is 60 dollars, if you can pay 120, that additional sixty is all principal, no interest. when the next bill comes is sixty less taxed for interest, each time you do that your prolly saving half what you will pay the long haul. even if you can only pay 80 or 100 thats all on the principal interest free.

[Well Spent]

Re: How Should I Repay My Credit Cards?

Hi Everyone,

Here's an update on my situation: I now have $2,200 on one credit card. The interest rate kicks in next month to 12%.

My question is, should I use my tax refund of $1,300 to pay this debt and then pay the remainder of $900 over the summer? I've never gotten this big of a refund so I wouldn't miss it.

But I wonder if I should put some in a savings account for an emergency fund? I have to use my current savings of $1,400 to pay for my summer courses (because my student loans don't come in until the Fall so I have to pay now with my savings).

FYI, my CC debt came from paying tuition before I applied for loans so I'm not concerned about incurring more CC debt after I pay off my current balance. After I pay it off, my goal will be building an emergency fund.

thanks for advice.

[Haku]

Re: How Should I Repay My Credit Cards?

What happened? Did you add $2200 to the original CC debts? Or, did you somehow manage to reduce your second CC down to $2200? Please tell me it's the latter.

Anyways, if it was up to me, I would take any and all available funds (including the tax refund), wipe out the first one (which already has a high interest at 10% but a low balance), and then hang on to it as an "emergency fund".

Next, I would throw everything else that's left into the second one (soon to be 12% at $2200) and try to get it as low as possible before the interest rates kick in.

I pray that's all your CC card debts, but in case it isn't, I would pay the minimum on the third until the second is paid off. Once you do that, you can cancel the worse of the first two and hang on to the other as the "emergency fund".

[Well Spent]

Re: How Should I Repay My Credit Cards?

$2200 is my entire CC debt (i also have federally subsidized student loan debt). I had started with $3961 debt between 2 cards in January and I've gotten it down to $2200 remaining on one card @ 0% interest until June. If I use my tax refund of 1300 towards it, I will have $900 in total CC debt @ 12%. But I won't have any emergency savings.

Should I use my whole refund toward this debt or split the refund between CC debt and emergency savings?

[starving_student]

Re: How Should I Repay My Credit Cards?

Welcome WS! I have a few suggestions:

First, I know you were hoping not to take out any more school loans than were necessary, but school loans are a lot less expensive than credit card debt (tax-deductible too!). You may want to think about getting larger school loans if possible to pay of the CC debt. (But don't keep charging on the credit cards, of course.)

Second, you said you don't know what the interest rate on the 2nd card will jump to in June. Time to find out now. It should be on the inserts that come with the credit card. If you don't have those call the company to find out. That's critical information. It's always better financially (although not necessarily psychologically) to pay off the highest-interest credit cards first. Your situation is a little more complicated because you have a 0% promo rate expiring -- we have to know more details to give a definitive answer.

Third, you may want to balance-transfer the $3278 to another promo deal before June. This is an option as well.

I second

[Tree0164]

Re: How Should I Repay My Credit Cards?

Get a small emergency fund if sounds like you are single so $500 would probably be fine and then send the rest to your credit card company.

I would do a balance transfer to another card.

Also if you are getting $1300 back you may need to adjust your tax withholding.

[Well Spent]

Re: How Should I Repay My Credit Cards?

UPDATE: I paid off the remaining debt of $2,200 this month before the 0% teaser rate ends in June. I am out of credit card debt. Finally.

[Well Spent]

Re: How Should I Repay My Credit Cards?

Tree0164,

How do I go about changing my tax withholding? I've always done the same thing: I file "exempt" meaning I have no dependents, which is "0" I think.

[Haku]

Re: How Should I Repay My Credit Cards?

UPDATE: I paid off the remaining debt of $2,200 this month before the 0% teaser rate ends in June. I am out of credit card debt. Finally.

Outstanding!

[flash]

Re: How Should I Repay My Credit Cards?

Congratulations! Well done!

And here I had all this advice I was ready to give...

[sweeps]

Re: How Should I Repay My Credit Cards?

How do I go about changing my tax withholding? I've always done the same thing: I file "exempt" meaning I have no dependents, which is "0" I think.

You can change tax withholding on a W-4 form, available from your HR department.

Claiming exempt is not the same thing as claiming 0. You can only claim exempt if you had all of your federal tax refunded last year and expect that again this year. That is pretty uncommon. Claiming 0 means you are not claiming any exemptions from withholding. The larger the number, the less your employer will withhold, the more money you'll get in each paycheck.

[abowers]

Re: How Should I Repay My Credit Cards?

I need to post somewhere that I finally paid of my CC that was carrying a 16% interest rate. It was $1500. I balance transferred some to a 0% card 3 months ago, the rest I've paid off over the last 3 months. I've put all my money from babysitting, surveys, selling bags, etc toward paying it off. Woohoo!

Now I work on paying of the 0% card before May 2007 (much smaller balance) -- and I've got the monthly payments figured out for that to have it all paid off before then.

This is a card that's been hanging over my head for some time, so I am very excited.

[greedy4chips]

Re: How Should I Repay My Credit Cards?

I need to post somewhere that I finally paid of my CC that was carrying a 16% interest rate. It was $1500.

Congrats on getting rid of that 16% debt! Even if you moved some to a 0% card for the time being. At least the monster is not growing.

And I bet you won't get into debt again at anywhere near 16%!

[abowers]

Re: How Should I Repay My Credit Cards?

Yeah, the remaining balance on the 0% Card isn't bad, and I won't have a problem paying it off before the promotional rate is over.

I worked out in my tiny graduate assistant budget how to pay that puppy off in a few months.

This cc debt was an unfortunate mistake from my 3rd year of undergrad. Blah. Just happy to have paid it down so much! :-)