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Holy I didn't realize she had a 250 annual charge!!! WTF?!??!?!?!?!?
It actually was touched on.So I don't think the obvious question has been addressed... why not pay ALL of the cards off immediately?
My wife and I made some STUPID decisions about 2 years ago, wound up $22K in debt, and I was pretty depressed about the situation. We consolidated everything to 2 cards (with 0% interest for a year) and then closed everything we had consolidated about 3-4 months later. We worked our asses off and made sacrifices to get out of debt and now that we're debt free, things are great. We got used to paying $400-$600 per month towards this debt (plus any bonuses, income tax refunds, etc) so now we're basically employing the same tactics (a little leeway of course) without the debt to pay ourselves what we were paying the creditors. We're getting a $10K 2 year CD next week to (almost) pre-pay for a trip to Italy in 2011 -our last "hurrah!" before we have kids- and will not ever put ourselves in that situation again. I use a low interest, fee-free rewards card to pay for everything possible and pay it off once every other week online so we can ac ulate travel credits while paying for things we normally would use a check/debit card/cash for.
It took me 2 years and thousands upon thousands of dollars to acheive this and you don't want to commit ~60% of one income tax rebate?
She has enough money to pay them all off at once, and the consensus is that she do so.
You are doing something very right too.
My wife and I are in a similar position, due to a lot of factors, and are really making some sacrifices to pay down the debt. It is working, and we are really starting to see some results.
Holy I didn't realize she had a 250 annual charge!!! WTF?!??!?!?!?!?
Date or marry a guy from So Cal & TELL HIM to pay off your credit cards….If that is not an option follow Cosmic's advise….
Ashley's dolphin can't pay off her credit cards.
All this thread does is show me why so many people are in the financial mess they are. If you do not have enough self control to manage your money such that you need to over pay the IRS and have them save it for you then you have a problem. You can even set up direct deposit to a savings plan if you do not ever want to see that money. Not only are you losing out on the interest you could make with that money, in the meantime you are also paying 22% interest on credit card balances that you could have paid of with that money. In addition, why do you even have over $400 at 22% on a balance at Old Navy in the first place?
Ashbeigh - In response to your initial question: I am a little confused. You will have far more money in your tax refund than you will need to pay off your cards. I would pay them all off, and bank (I said BANK) the remaining money. Worry about your student loans when you and your lender agree to take the loans out of deferrment. I assume your agreement is that once you have another job, they will come out of deferrment and you will be able to begin paying that money back, but correct me if I am wrong. Anyway, if I, and many of the rest of the posters here are missing something, and you cannot pay all of your cards off in their entirety, then you should absolutely pay off the cards with the higher interest rates first. This will keep the most money in your pocket over the long run. If you had your choice of taking out a loan at 14% and a loan at 22% which would you choose?? If you pay off the 22% card, you are effectively choosing a 14% loan. Make sense?
As far as your credit score is concerned, regardless of what card you pay first, it will have the same effect on your credit score. If you pay $450 to card A at 22% that you have had for 12 years, it will have the same effect as if you paid $450 to card B at 12% that you have had for 6 mos. The reason for this is that as far as credit cards are concerned, their effect on your credit score is based mostly on your credit utilization. This is the percentage of your total available credit that you are using. For example, it looks like you have 1500 total credit limits among your cards (3 x $500). Of that 1500 you are using about $1300 (about 450+450+400 if I read correctly). So you take $1300 used and divide by $1500 available and you will find that you are utilizing almost 87% of your available credit. This is not good as far as your credit score is concerned. Ideally you will use between 1 and 9% of your available credit because this shows the credit bureaus that you are able to manage your credit (not using cards shows no management skills), yet you are not relying on them. You will receive a pretty big bump by bringing your utilization under 50%, then under 30% another decent bump on down to below 10%. Another thing that this means to you is that if you close a card, that it will negatively affect your credit score because you have lower available credit to offset the credit that you are using. (example if you have 3 cards with credit limits of 500 and a balance of 500 between all three of them, then your credit utilization is 33%, but if you close one of those cards without paying anything, you now have 1000 available credit and 500 of balance, a 50% utilization. Closing a card will also eventually negatively affect your credit score because one of the score determinants is average age of accounts.
Ok, I may have gone a little overboard, I am sorry if I have, but there is the info you can use to make your decision. I hope it helps.
250 dollar annual fee!! I'm still blown away by that. Why the would anyone pay that?
in' aye...I don't! None of my cards have any annual fees. $250 is outrageous.
Ok that makes more sense then. That sounds pretty ing insane.
Lots of people with marginal to questionable credit can obtain a high interest rate card...and along with the high rate you get high annual fees. 250 might be a bit of an exaggeration but I must have sifted through 5-6 cards with annual fees in the 150 range before settling in on what I have. Its a reality and most people don't realize the annuals because all they can think about is getting a 500 dollar card.
Same reason why some people pay over $1000/month for a new, shiny F-150.
It's not that hard to have and maintain good/great credit. Stop buying you couldn't otherwise pay for with cash and pay your bills on time.
roflwith an interest rate increasing in a few months due to the recession.
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