CC debt question

[Hegemon]

So long story short I was a retard in my youth and now have a hefty CC debt load I am working to remedy. Here is my question.

Let's say I have 40k in cc debt. APR ranges from 8.25 to 14.25 on 5 different cards. I am looking to open a 0 APR for a year and transfer as much as they will allow to that cc. This is in an effort to as quickly pay off my debt load. My question is does it make sense to move about 60% from from several cards to the 0 APR in hopes of possibly improving my credit based on several cards not being over the heavy debt load % and improving my chance of getting a second 0 APR card in a couple months? Or is it better to just move all of the highest interest rate cards to 0 apr and still have most cards with either 0 balance or nearly 100% balance?

Let me know if I didn't make sense or if you have any suggestions. Thanks a ton.

[jIM_Ohio]

Your best bet is to pay off as many cards in full as possible.

Not because of credit scores per se, but because you want to reduce your minimum monthly payments to be to as few debtors as possible.

You cannot finance your way out of debt.

List all 5 cards. List balance, interest rate, monthly payment and available credit.

List your monthly budget as well including expenses and income.

[noppenbd]

Jim is correct, and to top it off, my understanding is that the credit score is based on the total utilization versus the total credit limit (not the individual card utilization ratios). So you are better paying off cards in full rather than trying to keep each one below 60% utilization (for the reason Jim mentioned).

[Hegemon]

My numbers are a little vague since I am at work but it goes about like this

Overdraft protection
Spent 550 - Available 1000 - ~14% - payment 20

Line of Credit
Spent 1800 - Limit ? - ~14% - payment 30

CC1
Spent 8,800 - Limit ? - ~10% - payment 160

CC2
Spent 9,400 - Limit ? - ~12% - payment 160

CC3
Spent 22,400 - Limit 25K - 8.25 - payment 450

We have about 3k net coming in a month and pay about 900 a month towards the above balances. This leaves us extremely strapped and only paying about 60 to 75 over the minimum balance. The credit line and two first cards are my wifes so I don't have the exact info in my head. We need to eliminate the debt and free up a little money for the budget. I have looked into paying minimum on the larger ones and all extra on the smallest and once payed move that entire amount to the next card working to eliminating them faster and that put me at about 7 years to work off the debt. I also looked at moving the first 4 into a 0 apr for a year provided the will let me go that big and that reduces my payoff plan to 5 years.

Any thoughts, hints or definite info you need to add in let me know.

[jIM_Ohio]

Without knowing the limits my advice should only serve as an example.

Take the LOC ($1800 balance) and transfer it onto cc3 where you have $2600 of available credit. Saved you $30 in minimum paymeny on the LOC

then payoff CC1 or CC2 by sending every last penny you have to those cards.

In mean time sell many things to raise cash and cut your budget to only what you need. Reduce cable, reduce phone, reduce/eliminate cell phones, cut gorceries, stop eating out. This should free up another $100/month. Maybe more.

Realize you have spent close to 41k,. You net 36k per year. You clearly have a spending issue and I would address the spending issue at same time you look for ways out of debt.

[Hegemon]

Thanks for the advice. Yea we are looking into cutting spending and we are currently very frugal and optimistically can get about $100. There was a definite spending issue we lived beyond our means for several years and has some poor business investments. You are right on the money I am currently doing inventory to find items to sell. Also looking into a part time job to bring in more.

What is your thoughts on a new 0 APR card that will have a variable 8.99 interest rate when 0% runs out. That would reduce interest on that amount for the time and a lower APR after than some of the existing cards.

[MaverickSB]

Depending on the LOC limit, transfer as much as you can and then re-negotiate the payment term.

I had debt spread across 3 cards, and put it all onto a LOC, then made a payment term of 72 months.

This gave me a set amount to pay every month.

Be sure the creditor allows you to pay more if you want without penalties. So when you have the extra cash, you can pay it.

Yes, the advice here is true, consolidation is not getting you out of debt, just making it easier to focus.

The overall goal is to try and get everything to one payment with a low APR. Personal Loans are ok too, but be sure to get one with decent flexibility.....

[jIM_Ohio]

Thanks for the advice. Yea we are looking into cutting spending and we are currently very frugal and optimistically can get about $100. There was a definite spending issue we lived beyond our means for several years and has some poor business investments. You are right on the money I am currently doing inventory to find items to sell. Also looking into a part time job to bring in more.

What is your thoughts on a new 0 APR card that will have a variable 8.99 interest rate when 0% runs out. That would reduce interest on that amount for the time and a lower APR after than some of the existing cards.

I did the 0% apr thing once upon a time. Doesn't need discussion- just do it.

If you have a house with equity consider using a HELOC. This assumes you are serious about fixing the problem though. If you slip up using a HELOC you might lose your house. The pro to this is you get to deduct the interest come tax time.

[maat55]

I would move the highest interest balances over to a 0% and begin to payoff cards with interest rates. You should be working two jobs and selling everything you can. The sooner you are out of debt, the sooner you can build wealth.

I would not be one bit concerned about my fico score during this process.

[Well Spent]

Good ideas here, but I would caution against moving debt around on cards. You have to get tought with yourself. Change your mindset and your habits is the only way to solve your $$ problem for good.

As you pay off each card, cut it up and close the account, and live on your net earnings. Make sure your spouse is on board with living beloq your means.

[omee]

Have you tried settling your debt? I should be able to refer you to somebody to get it done. Send me a private message since I would not want to come across as spamming or advertising.

[osadg]

I know it's not advice that everyone might agree with, but I'd suggest you take the 0% APR. If you've already looked over the numbers then transfer your highest APR balances to the 0% card, and schedule your new payments around getting that account paid off before that offer expires. When I first decided to start getting out of debt I did the same thing. It may not be the absolute best thing for your credit, but I was able to get my cards paid off in half the time, and without having to adjust my household budget-which sounds like you don't have a lot of room to mess around with anyway. And as I got more cards paid off that way, I was able to keep paying more on the next card and so on. It's up to you, but it could very well be worth it!

[Gruntina]

I would move the highest interest balances over to a 0% and begin to payoff cards with interest rates. You should be working two jobs and selling everything you can. The sooner you are out of debt, the sooner you can build wealth.

I would not be one bit concerned about my fico score during this process.

This makes sense as the highest rate card actually has the lowest balance which is sufficient amount to be fully transferred to the 0% card.

Otherwise, if you were only to transfer a portion of a card over, it would create additional card payments to worry about with the monthly minimums payments rather than replacing a card payment for a better interest deal with the same count of credit cards.