Paying Off Credit Cards

Just don't fart while writing the check, it will lower your score possibly. Seriously, just pay it off if you have had it hanging over your head. 30% is insane. Nobody knows exactly how this stuff works and having a low balance long term is best. You credit score should start going up no matter what.

Let me jus throw this in the discussion too. In about a year or so I plan to buy a house. So, I'm probably going to need a pretty high credit score to get a mortgage. That's why I'm kind of worried about the credit score.

Also, I have car and student loan payments, so maybe by continuing to make those on time every month it will offset any negatives from paying off all credit card debt right away.

I would think any affect on your credit score would be marginal- definitely not worth paying 30% interest any longer!

Originally Posted by odoreater

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Let me jus throw this in the discussion too. In about a year or so I plan to buy a house. So, I'm probably going to need a pretty high credit score to get a mortgage. That's why I'm kind of worried about the credit score. Also, I have car and student loan payments, so maybe by continuing to make those on time every month it will offset any negatives from paying off all credit card debt right away.
Definitely! Just setup automatic payments well over the minimum for those and it should make a big difference. Edit: 30% is insane, btw. You may also find some good info here on increasing your credit score...

Originally Posted by skalogre

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Definitely! Just setup automatic payments well over the minimum for those and it should make a big difference.

Yeah, I plan on setting up automatic payment on those as soon as I build up enough of a cushion to insure that I will not overdraw on my checking account.

Originally Posted by odoreater

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Let me jus throw this in the discussion too. In about a year or so I plan to buy a house. So, I'm probably going to need a pretty high credit score to get a mortgage. That's why I'm kind of worried about the credit score.

Also, I have car and student loan payments, so maybe by continuing to make those on time every month it will offset any negatives from paying off all credit card debt right away.


Get your credit report now and start working on it. When I did mine I found a lot of stuff that was not correct and had to spend a huge amount of time getting it straightened out.

It may be worthwhile to go talk to a financial adviser about your plans. I know the one thing they will tell you: SAVE AS MUCH MONEY AS YOU CAN!

Originally Posted by odoreater

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Yeah, I plan on setting up automatic payment on those as soon as I build up enough of a cushion to insure that I will not overdraw on my checking account.
Setup a second checking account just for the payments. If you have it at the same institution as your primary account you should be able to also do much faster transfers between them. If you find it hard to keep the money aside have your employer split the direct deposit to more than one account. The bank can give you the paperwork for that, if the employer is clueless... Good luck and congratulations!

Originally Posted by skalogre

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Setup a second checking account just for the payments. If you have it at the same institution as your primary account you should be able to also do much faster transfers between them.
If you find it hard to keep the money aside have your employer split the direct deposit to more than one account. The bank can give you the paperwork for that, if the employer is clueless...

Good luck and congratulations!

Having a chunk of your paycheck diverted to another account is a great way to save money.


Something else for the whole house buying experience:

Figure out how much your monthly mortgage payment is likely to be. Subtract your current rent from this amount. However much money left over is the minimum amount of money you should be putting into savings each month right now. If you can't live putting that much money into your savings account it's a bad idea to buy a house.

I currently put half my paycheck (if possible) into an ING high interest savings account, even if it means I'll be paying interest on my cc, I still put it in there because I won't touch it. If things get too out of hand on my cc, it forces me to spend more creatively.

Let me know if anyone wants to hook it up with ING. I get $10 for referring you with my invites, and you get $25 for signing up.

Originally Posted by tiecollector

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I currently put half my paycheck (if possible) into an ING high interest savings account, even if it means I'll be paying interest on my cc, I still put it in there because I won't touch it. If things get too out of hand on my cc, it forces me to spend more creatively.

Let me know if anyone wants to hook it up with ING. I get $10 for referring you with my invites, and you get $25 for signing up.

Don't forget Electric Orange!

Originally Posted by skalogre

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Don't forget Electric Orange!

Wow nice, they have a checking account now. I like Wells Fargo though for 3 reasons...
1) WF ATMs and banks everywhere
2) Money takes 2-3 days to transfer to ING, which means I have to really want the money.
3) Through my employer, billpay and all that jazz is free.

Closing your credit cards will effect your debit to credit ration. So say you have 3 cards with a limit of $500 each, you have a credit limit of $1500. If you max one out and have $500 debit / $1500 credit ratio. If you close the other 2 you'll have a $500/$500 ratio. That will hurt your credit score since you debit to credit ratio is 100%. Inquires for loans also hurt your score. I haven't heard of paying off your debit adversely effecting your score, could be possible.

Its best to keep most of them open, cut them up and forget about them. Once you pay off your debit, call the CC companies up and tell them your are closing a few cards, but will keep the cards open with the best rates. See what they can do.

Thanks for your advice fellas. I think I'm going to just pay off the darn things entirely.

I think thats your best bet, if you put it off now you may never get to it.

i didnt read everything here so i am pretty sure there is alot of sage advise.

but i would pay off what you can right now. 20%+ interest on anything is too much.
remember, there are other ways to raise your credit score, gain good credit history.
also the credit score increase over a few months is negligible in your case compared to the interest you must save yourself from paying.

pay them off, eliminate some of your cards, and keep one or two. start from scratch and use them just enough where you can pay them off completely every monthly statement. do this for a year, and your history will improve and then later card companies and/or the cards you have will start sending you 0% apr intro cards or free balance transfers with very low apr and such that will come in handy for alot of things.
take advantage of these things. use them, but moderately but just enough so you can handle it and pay them off when the intros expire.

warning, when a free balance transfer with 0% apr comes along make sure you use it when the account is fully paid off if coming from a existing card.
because if you have a balance on it that is accruing interest, the balance 0 apr transfer will sit on top of that balance and all monthly payments made will apply towards the balance transfer NOT THE EXISTING BALANCE ACCRUING INTEREST.

cc companies WILL lower your interest rate when a good history exists and you inquire. YOU CAN take down those 24.99% APRs down to prime (lower than 10) when you start increasing your rapport with these companies.