What is the best way to pay down credit card debt?

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kashmac123
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What is the best way to pay down credit card debt?

Postby kashmac123 » Fri Aug 10, 2012 8:29 pm

Hi Guys:

I am a newbie here. Just wondering the best way to pay down debt on credit cards?

I know about Dave Ramsey's snowball.

What is the avalanche method?

Thanks to all.


kcarter609
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Postby kcarter609 » Fri Aug 10, 2012 8:38 pm

The avalanche method is basically paying the minimum payment on all credit cards except the one that has the highest interest rate. On that one, you pay every extra dollar you can afford to pay on it until it's paid off. Then, do the same to the card with the second highest interest rate and keep repeating this until they are all paid off.

What cards do you have?
What are the interest rates?
What are the credit limits?
What are the balances?
What are the minimum payments?
What can you afford to pay extra each month?

Active Cards:
Chase Freedom 10+10 Visa Signature ($9k Limit - 8/2012)
Chase Sapphire Preferred ($10k Limit - 2/2013)
Chase Ink Plus ($7k Limit - 2/2013)
Discover IT ($9.5k Limit - 10/2012)
AMEX Zync (No Pre-set Limit - 1/2010)
AMEX Blue Cash Everyday ($20k Limit - 1/2013 - Backdate to 1/2010)

DavidNY
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Postby DavidNY » Fri Aug 10, 2012 8:50 pm

The faster you pay off the cards, the more you'll save. If the debt is a sum that will take more than a couple of months to pay off you might want to look at getting a card with 0% APR BT program that you can move some or all of the debt to.

kashmac123
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Postby kashmac123 » Wed Aug 29, 2012 11:14 pm

Hi Guys Thanks for your reply.

I just listed all 10 of my cc from highest to lowest by interest rates.

Added up all the minimum payments, interest and fees and subtracted the interest and fees from total payments to get the net
to principle which reduces the balance.

No wonder I am broke LOL,I am paying $1920 In interest and fees a year. Then add the annual fee that some cc charge approx
$200 more that is $2120 for me. Now how about the rest of you?

$2120 X 5 years that equals $10,600.

I believe in cc I like them very much and everyone has to eat So I don't mind paying something for using O.P.M.

Now I really see the light. I have worked out a repayment plan that will pay all 10 cards off by June.

After That I will save my $2120 for 5 years and see what happens after that.

DavidNY
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Postby DavidNY » Thu Aug 30, 2012 2:10 pm

kashmac123 wrote:I don't mind paying something for using O.P.M.


Banks aren't people, they are corporatons, which are paid enough in merchant fees for the use of their money. There's no need to pay interest if you can avoid it.

kashmac123
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Postby kashmac123 » Thu Aug 30, 2012 5:13 pm

DavidNY, Thanks for your reply.

Just sitting here thinking this is the business to be in.

kashmac123
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Postby kashmac123 » Thu Aug 30, 2012 6:00 pm

UPDATE

I am ready to kick this payoff in high gear. Worked out the payment plan for each credit card.
The big one gets paid off in February after I have paid off 5 cc before the big one by December.
The big one is $2500 limit $8.00 from maxed out @ 29.99%.

My brother suggested that I pay the highest interest first and then use it to pay off the other
lower interest cc which will keep me paying interest @ 29.99%.

AS you can see this is wrong as stated above. AS I pay off the big one that is it no need to
use it to pay the others.

Thanks for all your help.

Happy days are here again!!!

DavidNY
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Postby DavidNY » Thu Aug 30, 2012 10:31 pm

If your brother really wants to be helpful (assuming he has good credit) have him get a new credit card with a 0% APR for 18 months deal, move your balance with the highest APR to the new card and pay him off when the other cards are paid. Even with a 3% BT fee, that's only about two months of interest on an 18% APR card.

kashmac123
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Postby kashmac123 » Mon Sep 03, 2012 10:15 am

DavidNY That is a good suggestion but we are talking about my brother. Sure he tells me that he loves me but when it comes
to his money he says he is not a bank and that he is going to keep his money in his pocket.

Anyone willing to take a chance? I am willing to pay 5% to anyone that will send a cashiers check to my cc company and pay off any
of my balances.

I have not missed a payment in 7 years and I don't plan to start now.

This is the list and the balance of each card and APR.

CARD NUMBER BALANCE INTEREST RATE

NO .... 1...... ............. $ 898 . ........................35.9%

NO ...... 2................ .. $ 2242............................29.9%

NO.........3.................... $ 463............................09.99%

NO....... 4.................... $ 486............................16.24%

NO...........5.....................$ 489.............................20.99%

NO............6.....................$ 438..............................20.15%

NO.............7.....................$ 389..............................20.15%

NO.......... ...8.....................$ 334..............................19.99%

NO...............9.....................$ 248..............................13.24%

NO..............10.....................$ 752..............................18.24%

The last card is already closed. I pay $20 every month..

Pick your number. We can work out the details.

The ball is now in your hands. Let's score some points.

I
Let's say you get the money interest free for 18 months. Where can you make 5% on that money before you return it to the bank?

trumpet-205
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Postby trumpet-205 » Mon Sep 03, 2012 10:36 am

I can offer you two methods of paying down CC.

* Snowball method.
Pay off the card with the least balance first, then the second least, and so on. That way you can allocate more money on other cards since you free up minimum payment and minimum finance charge. Paying off your high interest card first does not necessarily save you money.

* Social lending.
Go to website like Lending Club or Prosper and request a loan there. If approved there will be various people on the internet to fund the loan. Social lending is like a personal loan where you pay fixed amount of money back each month. Unlike personal loan however, social lending usually has lower APR, and there is no penalty for paying it back faster. Use the money you get from the loan to pay off all your CC debts.
In My Wallet:
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Discover it (07/2012) | AMEX BCP (09/2012) | TD/Target REDCard (10/2012) | Chase Ink Classic (11/2012)
BofA BBR (04/2013) | FNBO/Overstock.com (02/2014) | Barclaycard Arrival (04/2014) | FIA/Fidelity AMEX (04/2014)



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