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post #1 of 18 (permalink) Old 02-01-2005, 01:10 AM Thread Starter
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Financial Question

Does anyone know if its better to pay off all your credit card debt at once in one lump sum or to make payments larger than the minimum to pay it off?

Patrick and I have $6,000 credit card debt and are finally able to pay it off but we are wondering if we should do it when we have the full amount in a month or in two payments of 3k each starting now.
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post #2 of 18 (permalink) Old 02-01-2005, 01:14 AM
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is the intrest too bad?
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post #3 of 18 (permalink) Old 02-01-2005, 01:14 AM
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My grandma worked at a bank my whole life. When I was trying to build credit my grandma told me to NEVER pay off a credit card completly right away unless you have other CCs with balances on them. For example if you have a Visa and you put 200 on it and then next month you want to pay off the 200 do that, and then put something else on it and pay it off, in your case I would make smaller payments,(if you only have a few CCs) so that way you build I good credit history and you are in good payment standings. But then again Im 24 so if somone older and wiser could give you good advise that would be good to listen to as well.
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post #4 of 18 (permalink) Old 02-01-2005, 01:48 AM
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i always pay mine off in full, but i have an insanely high interest rate, so i don't feel it's worth it paying the extra cash.

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post #5 of 18 (permalink) Old 02-01-2005, 04:24 AM
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Yeah, I would say it really depends on the interest rate.

I wish I never had a credit card
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post #6 of 18 (permalink) Old 02-01-2005, 08:00 AM
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When we were trying to buy our house the mortgage agent basically told us that no one knows what REALLY effects the credit score. MY BF had a low limit credit card that was almost paid off. He paid it off and it dropped his credit score. It is like the want you to owe money.

~Shelly~

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post #7 of 18 (permalink) Old 02-01-2005, 12:07 PM
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Pay it off! Money may be tight for a few weeks, but you won't have that extra bill the next month ...

By the way, did anyone catch that Frontline special on the credit card industry? It was frightening -- they are completely unregulated, can change your interest rate at anytime, and there is no cap on how much interest they can charge. The scariest thing is if you fail to pay on any other loan (doesn't have to be a credit card), such as house or car payment, they can change your interest rate because they consider you an at-risk customer.
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post #8 of 18 (permalink) Old 02-01-2005, 12:07 PM Thread Starter
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Well we have had the 6k balance on it for over a year, and the interest is a lot, we could pay it down to just like $100 I guess.
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post #9 of 18 (permalink) Old 02-01-2005, 02:30 PM
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When I talked with a credit specialist awhile back, they recommended I pay off my high balance on my credit cards right away since I have been in such debt for so long. Once you pay it off, you can start doing the leave a little bit balance left over and don't pay it all at once thing. But I have a lot of debt on my 2 Mastercards right now
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post #10 of 18 (permalink) Old 02-01-2005, 02:48 PM
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Back in a former life as a credit approver, I liked to see payment history. If you're building credit, pay it down to a couple hundred dollars and keep it there, paying more than the minimum payment every month, but maintain a balance and payment history for as long as possible. If your credit is otherwise good (and varied), and you're stable in employment and residence, you can pay it off if you want. If your debt-to-income ratio is high (your monthly payments as a percentage of your income), it will benefit you to pay it down or completely off.

Back in the old days, the credit bureaus just showed a limit, current balance/payment due, highest balance used, and payment history showing only whether or not payments were on time or late. I haven't seen a bureau in about 12 years though, so I'm not sure what they contain these days.
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