Author Topic: Credit card debt resolution  (Read 2107 times)

doublezer6

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Credit card debt resolution
« on: September 15, 2016, 10:59:58 AM »
I have about $10k total of Credit card debt, $3k of which is currently on a 0% intro APR from recently transferring the balance (the card company wouldn't raise the limit any higher than this $3k amount). The remaining $7k is spread between two cards both with interest rates in the low-teens. How long should I wait before getting another 0% APR balance transfer card so as not to take too much a hit to my credit? Are there other alternatives to consolidate the remaining balance other than getting another 0% APR card for balance transfers?

Just a side note, I am currently putting all possible funds towards eliminating this debt as fast as possible, currently around $1100/mth total, so I don't expect this debt to be around much more than about a year or so, but want to reduce the amount of interest I am getting pegged with as much as possible in the meantime.

Thanks!

Mother Fussbudget

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Re: Credit card debt resolution
« Reply #1 on: September 16, 2016, 02:45:04 PM »
Don't wait.  Apply for another card right away.  You can potentially save (~15%) every month.  A 'hard pull' doesn't impact your credit rating very much.  Try going with another company - ex: if current card is with Citi, apply for a Chase card.

Keep paying those suckers down.  At the end of the tunnel, there's nothing like the feeling of receiving a monthly paycheck, and finding you have $X-thousand dollars left in your checking account from the PREVIOUS month, then plunking that excess amount directly into your investment portfolio.   All the best!

doublezer6

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Re: Credit card debt resolution
« Reply #2 on: September 29, 2016, 09:29:29 AM »
In addition to paying down the CC debt quickly, my wife and I are wanting to purchase a house around July of next year. Currently we are paying $1500/mth in rent and by purchasing a home in our area we expect we can get an equivalent house with a mortgage below $1000/mth, which frees up around $500/mth that we can continue to eliminate debt and put towards wealth building.

So will the net effect on my credit of opening more 0% balance transfer cards back to back to eliminate the interest I'm still incurring leave me better or worse off in terms of my credit when it comes time to shop for mortgages? Will the amount owed to available credit ratio benefit I will gain by opening more credit lines help enough to offset the hits to my credit cause by additional card inquiries?

Axecleaver

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Re: Credit card debt resolution
« Reply #3 on: September 29, 2016, 09:39:08 AM »
What's your credit rating? If it's over 760, you're going to get the best rates already. It's not worth paying 15% interest to improve your rating by 10 or 15 points. If you're in the 600-700 range, then you may have cause to worry about this.

You also need to watch your debt/equity ratio to qualify for the loan, and ensure you have enough saved for closing costs +20% down payment. If you don't, you'll be paying PMI, which is hideously expensive. You will pay about 1% of the loan in PMI every year for insurance that doesn't even protect you - it protects your bank.

A full case study might give us some better ideas to help you hit your goals.

HipGnosis

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Re: Credit card debt resolution
« Reply #4 on: September 29, 2016, 12:50:53 PM »
Get another low interest teaser rate card ASAP (from another Co. as suggested), and then another one next month.
Then, actively manage your credit and debt.
Just pay the minimum on the teaser rates (I round up to the dollar), and on the next lowest interest rate. Pay as much as you can on the highest interest rate.
BE SURE to pay off (or transfer) any balance before the teaser rate expires - unless it's a lower interest than you have elsewhere.

You should be in fine shape by July.  More credit cards means lower credit utilization rate (as long as you don't add more debt) and more accounts which both raise your credit score.

doublezer6

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Re: Credit card debt resolution
« Reply #5 on: September 30, 2016, 12:48:00 PM »
Thanks everyone for the help. Credit score is currently in the 650-750 range (I've seen different scores from different sources). Not bad considering 4 years ago I was sub 500...

I will try to put together a full case study for public review soon.