I Maxed Out All of My Credit Cards

For just about anything you want to get off your chest about credit cards.
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tuesday2014
 
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I Maxed Out All of My Credit Cards

Postby tuesday2014 » Tue Feb 04, 2014 1:40 pm

I maxed out my credit cards helpI have 7 small credit cards. I have had them one year now. The highest is 1k the lowest is $200. They are all maxed out now. I had a death in the family and had to use them from me not working (I am working now). I am able to make payments ontime and have never missed a payment ever. But how can I get my credit to go up still? Now it's at 610...I can start paying $50 on each card monthly. Will this help?


samhradh
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Postby samhradh » Tue Feb 04, 2014 6:59 pm

You can get your credit up by continuing to pay on time and over the minimum as much as possible. This will help you pay your debt down. Try to consolidate your balances onto a card with as low an APR as you can.

Stop putting new charges on your cards. Use a debit card until your debt is gone. This will take time but your diligence will pay off eventually.
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MemberSince99
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Postby MemberSince99 » Tue Feb 04, 2014 7:18 pm

Normally I caution against using debit cards but since you have no money, what's the harm really they can't get blood from a turnip, unless the vampires have something to do with it but that's another novel...

HookEmHorns
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Postby HookEmHorns » Tue Feb 04, 2014 7:42 pm

Focus on one at a time while making minimum payments on all others. When that one has a zero balance do the same with the next card.
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JoDa
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Postby JoDa » Tue Feb 04, 2014 9:34 pm

All good advice above, but I'll add take a deep breath and stop freaking out. You dug yourself a hole, but it's not a *huge* one, so you just need to budget carefully and pay as much as possible on your debt. It sounds like you have enough cash flow to lick your debt pretty quickly. Paying down lines will improve your credit quickly. How you do it is a matter of preference (some people like to tackle small ones first to build confidence in your ability to get out of debt, I prefer to focus on high-interest first to get the biggest bang for the payments). Just make sure to mothball cards as you pay them off, so that you can actually get out of this hole.
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thom02099
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Postby thom02099 » Wed Feb 05, 2014 9:55 am

tuesday2014 wrote:I maxed out my credit cards helpI have 7 small credit cards. I have had them one year now. The highest is 1k the lowest is $200. They are all maxed out now. I had a death in the family and had to use them from me not working (I am working now). I am able to make payments ontime and have never missed a payment ever.[color="red"] But how can I get my credit to go up still? Now it's at 610.[/color]..I can start paying $50 on each card monthly. Will this help?


The very FIRST thing you must do is, not worry about your credit score. That's the least of your problems. Focus on the advice that others have provided you, follow it diligently and the score will take care of itself.
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darkguy2
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Postby darkguy2 » Wed Feb 05, 2014 11:00 am

HookEmHorns wrote:Focus on one at a time while making minimum payments on all others. When that one has a zero balance do the same with the next card.


I would suggest this. It is called snowballing and it works pretty well. The way it works is that you choose one card that you want to pay off first. It is up to you to choose. It can be the highest interest one of the smallest one or another that you really want to pay off. Once you have one then you will pay the minimum on all the others and pay the max amount that you can afford on the one you chose. Make sure that you still have enough money for living expenses. Once you pay off the first card you do not reduce the amount of money you are using to pay off your debt, instead you take all the income you were using to pay off the first card and add it to the minimum that you were paying on the second card you want to pay off. This is why it is called snowballing. As you pay off more cards the amount you are using to pay off each subsequent card increases. That way it gets easier to pay them off as you go along.
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augiedog
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Postby augiedog » Wed Feb 05, 2014 2:04 pm

Since you've had them all for one year now, I doubt they are in the 0% intro period anymore (if you had one). If there are any cards that still have a 0% rate, do utilize the minimum monthly payment until that period ends. (And write it down and know when it does end!) Beware that once the 0% period ends you are responsible for paying interest on all purchases from the first day you began to carry your balance over!

Call your accounts and ask for a rate reduction or extension on your interest 0% period. Have you carried balances over in the past or is this your first time. Let them know! They can extend payment due dates and make adjustments to your interest charges.

From the sounds of it, you have anywhere between $4 to $6.5k in debt. I'm sure you can pay this off. Reduce and consolidate any debt you might have. Are any cards charging you an annual or service fee? Cancel them! Did you buy something that you no longer need or want before the death had occurred? (My condolences for you.) Return items that you no longer need and cancel services that you're not using.

Consider the order in which you are billed for each of your accounts, and what the charges total to and what they consist of. The most expensive charges are paid off first! If you bought an item for $300, and a pack of gum for $2, and you paid $250 off of your bill, that means you paid $250 of the $300 item. Banks know that this method can compound interest easily and is harder to pay off.

You can now begin paying off your debt in a manner that costs the least for you. Assume you will pay the minimum payment for all of the cards, or $50 for each. You can set something up in excel with the summation formula to see how much you will be paying off, and how much you will still owe. Now adjust the figures to determine how much you can pay off at this moment (it should be close to what's already in your checking account).

I don't suggest a debit card at all. Banks charge HUGE fees for over drafting. Ask your bank to decline transactions that would result in an overdraft if you do insist on using a debit card. If you do overdraft, tell them they should not have allowed it and to be credit back for the overage. Credit card interest is often a lot less than overdraft fees (from what my friends tell me)... You can also just use cash... How many pennies do you have sitting around your house? Lol. Spend them or deposit them!

Good luck!
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bgalakazam
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Postby bgalakazam » Wed Feb 05, 2014 3:01 pm

I don't know what people have agaist debit cards. You know how much money you have and you don't end up in debt. With CC it's easy to go 1K-5K-10K in debt in a month since you think you "have" the money, but you really don't.

Also, if you want to pay off the cards you shouldn't use them. Then online purchases and other places that don't take cash or check, you should use the debit card. I do this and the only time I had problems with too much debt is when I was using the CC exclusively. $2k limit doesn't meant you have $2k. It easy to spend $2k when you don't have it on a CC and almost impossible on a debit card.

MemberSince99
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Postby MemberSince99 » Wed Feb 05, 2014 3:43 pm

I personally don't have anything at all against them. I had only a debit card for many years.


The reason I can't advise using one is simply if thieves hack or steal your card, they are draining your bank account money, where if they hack or steal your credit card, they are stealing the lender's money. From your perspective which would you prefer (I know neither but if you had to pick one...) Then you get the joy of fighting with your bank to get your money back. With a credit card you simply do the paperwork and get the card cancelled and a new one sent and the lender takes it from there.


Plus you have longer to catch fraud with a credit card - with a debit card you'd better check your account daily because you have I believe 48 hours to report fraud to avoid liability.


And that's just security - how many debit cards pay you rewards? Or have the perks that credit cards offer? Or report your good use to the credit bureaus building your credit?


Yeah, if you can get a prime credit card, I just can't for the life of me see using a debit card I see no advantage. However as you said that assumes you don't overspend. That's the one danger and for someone who can't resist that, I'd say take your chances with the debit card, keep a minimal amount in the account it's hooked to and just live by cash and carry. Otherwise, if you can live within your means, there is no reason I can see to use debit.


After many years of having debit only, I treat my credit cards like they are debit cards - I never spend more than I can afford to pay right now. Having the debit card for years ingrained that discipline in me, which I used to lack.



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