poeticbbq asked:
I owe $1300 on two separate cards and just received a work bonus for $1300. Both of my cards have a $2000 limit. Is it better for my credit score to put that money equally down on both cards, payoff one of the cards, or save the money for an emergency fund? My credit score is around 670 and trying to increase it and possibly buy a home later this year.
I owe $1300 on two separate cards and just received a work bonus for $1300. Both of my cards have a $2000 limit. Is it better for my credit score to put that money equally down on both cards, payoff one of the cards, or save the money for an emergency fund? My credit score is around 670 and trying to increase it and possibly buy a home later this year.
hmm…
what interest rate are you paying on your c/c purchases?
That depends on how much you already have in savings. If it is not much, I’d pay off the higher interest rate card and save at least $500.
You should have your down payment plus at least 3 months’ living expenses in savings before you go house shopping.
Pay off which ever one has a higher interest rate, then use the payment you were making on that one to double up payments on the lower interest rate ones, so you can get out of debt sooner.
To bump up your credit score, make sure you pay all your bills on time, and try to get your use of credit cards down to only 20% of the available credit limits.
If you have the willpower not to use the cards again, you should pay both of them down to a small balance. Use the cards for a small purchase and then pay more than the minimum every month. Since both cards have a $2000 limit, you shouldn’t carry more than 1/5 of that or $400. If it were me, I wouldn’t carry more than $250. Again, pay more than the minimum every month and your credit score should reflect a positive over the next few months.
If you don’t already have an emergency fund of at least $1000, please do that first. Then, put the rest of it on the smallest balance of the credit card. It would really be the best to pay off at least one card.
If you don’t have the emergency fund, you may have a emergency that derails your attempt to get out of this debt. And if you get one CC paid off, you only have one to worry about, and you can put more money onto the one that is still carrying a balance to get it paid off.
What good is paying interest? It makes us poorer, and the bank or card company wealthier.
Definitely pay off the credit cards, they are costing you more a month than you will make in interest with an emergency fund.
Pay off the highest card. Use whatever’s left on the other card.
After these are paid off, I would not use the higher interest rate credit card unless it’s a true emergency…as in you are broken down in the middle of nowhere and that’s the only card the towing company will take.
Pay off your credit cards.
You will see an immediate boost to your credit score because your available credit line is $4000 instead of $2700.
($1300 used credit line leaves $2700 available credit line)
Keep each card at 10% of its credit limit and you will see a steady increase in your credit score.
Charge only $200 at the most on each card and either pay off in full or start paying it down to get it to Zero over a longer time period. Either way your score will rise.
That is how you get a high credit score. Not much science to it.
The credit bureaus want to see that you “don’t need” your lines of credit to make a living. If you stick with the 10% rule on every credit card you own you will soon see your score go in to the high 700′s.
(as long as you don’t have any other derogatory items like delinquencies and charge offs, of course.
Put it this way… the money you save on interest charges over time is a lot more than $1300. Just start putting the monthly minimum payment that you are now paying into a savings account and watch how fast you will have $1300 together. (not having a monthly credit card payment is PRICELESS).
Pay $1000 on the card with the highest interest rate, and pay $300 on the other one. Then focus on getting the one with the lowest balance paid off.
To some extent the answer to this question depends on the interest rate you are paying. If you pay more than, say, 10% I would pay off the credit card under normal circumstances. Unfortunately we are not living in normal circumstances, which is why I suggest you keep your cash in a savings account. It is quite possible that a credit card company cancels your credit card and then you won’t have access to credit anymore. If you keep your cash, you can kind of “lend” it to yourself if you really needed it no matter what the credit card company does on its end.
Having said all that, I also suggest that you start living by a strict budget. Begin by setting up a budget. Then record all your expenses. For all you know you may have some money left over at the end of each month and you can pay off your credit card through regular, but increased monthly payments.