Credit Card Debt Help

**disneysteve** · 01-17-2008, 05:43 PM

I'm a little confused but think I get the idea.

You've gone from the 3 cards you listed to 5 cards, the last 2 with 0% deals.

I would put all extra payments toward the card with the highest rate, currently 16.9%. I wouldn't accelerate payments on the 0% cards as those are the ones costing you the least amount to carry the debt. Just be sure you will pay off the 3 cards with 0% and 4.9% before the special offer periods expire.

I wouldn't be getting any more cards beyond the 5 you've already listed.

**buzz** · 01-17-2008, 05:44 PM

Hi, welcome to the forum. Don't apologize for a long post, details are appreciated here.

You are definitely on the right track. I don't think I would pursue the Merril+ card. Aggressively pay down your balances, minimum to all*, and the remainder of what you can afford to the highest interest-bearing debt.

*I would pay more than the minimum on the 6.9% card. That is a nice rate, try to maintain a healthy relationship with them. They may jack your rate if you make them nervous.

As you pay down your balances, your credit rating will improve and more 0% offers should appear in your mailbox. I would place more emphasis on saving money than credit rating. Credit rating doesn't pay the bills. If you suffer a rate-jack from one of the cards, I would definitely try for another low-rate card.

Good luck on your journey back to a $0 balance.

**Lindahfx** · 01-20-2008, 03:56 PM

Originally posted by alliebee2 View Post

Hi everyone. I'm new to this board and could really use some advice.

I've always been very responsible with my credit cards. Never had more than a couple hundred dollars on any given card and paid the balance in full religiously each month. Recently, I've had some hard times financially and have had to rely on them. I've now got quite a bit of debt. Here's a brief overview of what I'm dealing with.

Card 1: $9,600 6.9% ($150 min)
Card 2: $3,000 16.9% ($90 min)
Card 3: $2,500 4.9% until sept ($40 min)

I applied for 2 cards with 0% rates. I was approved for both but I didn't get the full amount I needed to transfer the entire 16.9% balance. The first one has a $1500 limit with 0% on purchases and balance transfers until April 2009. The other has a $750 limit and 0% on purchases and balance transfers until February 2009. I'm also considering applying for a Merrill+ Visa with 1.9% on purchases and balance transfers until February 2009 and 9.9% after. I'm worried though that it will hurt my credit if I open any more accounts.

So this is my plan...

I've transferred $1000 onto the first card and $500 onto the second card. I'm going to continue to make the minimum on the 6.9% card, put $200 towards the 4.9% card, put $200 towards the 16.9% card, and then put every penny I can towards the 0% cards and hopefully pay those off in about 4-5 months. Then do another transfer for whatever is left on the 16.9% to the 0% until April 2009 card and pay that off about 3-4 months later.

Although I had really hoped to be able to transfer all of the 16.9% to a 0%, I had a feeling I wouldn't be able to due to the amount of debt I have...but, it's a starting point. And I think if I get the 0%, 4.9%, and 16.9% paid off, then I can put about $500-$700 a month towards the 6.9% and hopefully be out of credit card debt in about 18 months. Am I headed in the right direction? Should I apply for the Merrill+ card too? Any feedback would be appreciated.

Thanks in advance and sorry for the long post.

If I were you, I would transfer off as much as possible to both of the 0% cards. i.e. take them to their max. Then make minimum payments on all cards except the 16.9% card. After that card is paid off, I'd work on the 4.9% card to get it out of the way... and then focus on the 16.9%. Of course, when the 2 0% cards revert to >0%, you may have to change your plan.

Hope that helps.

**cptacek** · 01-20-2008, 08:54 PM

You've gotten some good advice here. You seem nervous that you can't pay off the 0% cards before you have to pay interest on them. But, they are 0%, so logically, paying the least on these makes the most sense, until the month before they reset. I think you can assuage your nervousness and at the same time get the most out of your payments. Your plan will probably work, but I think a different order may help you pay less interest.

Here is what I would do (if you have extra money to throw at it)...first a recap. If this is wrong, let me know:
Card 1: $9,600 6.9% ($150 min) - $1000 (balance transfer) = $8,600
Card 2: $3,000 16.9% ($90 min) - $500 (balance transfer) = $2,500
Card 3: $2,500 4.9% ($40 min)
Card 4: $1000 0% until 04/09 (I'm guessing $20 min)
Card 5: $500 0% until 02/09 (I'm guessing $10 min)

You have about 15 payments until Card 4 resets and about 12 payments until Card 5 resets. (I say about because it depends on your billing cycle. If it is different, recalculate this.)

If you struggle with making all the minimum payments, I would tackle the debts from lowest amount to highest...ONLY UNTIL you can comfortably make the minimum payments, and have some extra money left over to pay more on the cards. As soon as you are not struggling to make the minimum payments, you should tackle this in a different order. (The plan you put forward says you have more money to put towards debt payment, so skip this.)

If you are not struggling to make the minimum payments, the next question is, are you worried that you won't be able to pay a large amount just before the 0% interest cards reset? If you pay 15 payments of $20 each, that is $300, so when the 0% interest rate resets on card 4, you still owe $700. If you pay 12 payments of $10 each, that is $120, so when the 0% interest rate resets on card 5, you still owe $380 on that one. However, if you pay $67 on Card 4 each month and $42 a month on card 5, they should be paid off the billing cycle before the interest rate resets. So, it's your decision on that one...I guess it depends on how comfortable you are with the interest rates resetting.

But, I think it is a no brainer to pay the most on Card 2. It is your highest interest rate, and will cost you the most long term. Every month, I would do this: $150 to card 1, $40 to card 3, $67 to card 4 and $42 to card 5. This equals $299, let's say $300 for a round number, every month.

In your plan above, you said you could put at the minimum $550 to debt, plus more ($500 - $700 a month?). Let's say $650. But, you also say that you plan to pay this off in 18 months. You owe $15,000 / 18 = $838. Can you pay that every month? If you can pay $650 a month, you have $350 a month towards card 2. If you can pay $838 a month, you have $538 a month towards card 2.

What does that do for you? If you pay $538 a month towards card 2, you will pay it off by May 2008. Then, you can start paying more to card 1. If you add this payment of $538 + $150, you will be paying $688 to card 1. The 0% interest cards will have died a natural death in Dec 08 and March 09, and then, add those payments to card 1. So, you'll be paying more to card 1 and have that done by May 2009. Then, two more payments of $838 to card 3, and one more about $500, and you're out of debt in August 2009. That's 20 months from now, less if you can pay more.

So, my plan basically says, divide the amount on the 0% interest cards by the number of months you have to pay before they reset and pay that amount every month. Then, pay minimums on all other cards, except the highest interest rate, and send all the money you can to that higher interest rate card. Repeat as needed.

Credit Card Debt Help