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Post by GamGam on Aug 8, 2014 17:09:46 GMT
Both!
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back to *pea*ality
Pearl Clutcher
Not my circus, not my monkeys ~refugee pea #59
Posts: 3,149
Jun 25, 2014 19:51:11 GMT
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Post by back to *pea*ality on Aug 8, 2014 17:10:46 GMT
I have always maintained excellent credit. But like everyone else, hard times fell upon us with job loss, we went through cash reserves, big expense would hit us.
Fortunately, as I had good credit, I was able to get a credit card (more than once) with terms of interest free for one year as long as the minimum payment was made.
Recently, I got an offer for an interest free credit card, it was for Frontier Airlines so I put our plane tickets and rental car on the card and will make four interest free payments for our vacation.
I am not credit adverse, if there is free credit out there use it!
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Deleted
Posts: 0
Oct 8, 2024 6:38:03 GMT
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Post by Deleted on Aug 8, 2014 17:54:32 GMT
I pay down debt first because it accrues so much interest so fast. I end up paying more for the debt than just the original cost.
I'd be very wary of opening a new account to move the debt. Having too much credit available can tip the balance and be bad for your score.
Chargin and monthly pay off is still positive activity on an account. Leaving it in the drawer and never using it is what can hurt you.
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PaperAngel
Prolific Pea
Posts: 7,801
Jun 27, 2014 23:04:06 GMT
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Post by PaperAngel on Aug 8, 2014 19:42:55 GMT
Both are ideal! I suggest completely paying off the credit card debt, if possible, then reestablishing your savings. This approach will save you money - without sacrificing your credit score - in the long run. IMHO there is absolutely no financial benefit to money sitting in a savings account with abysmal rates, while interest is accumulating at a much higher rate on a credit card. Please DO NOT open a zero interest account if you have savings as an option.The addition of another card (that you hopefully will never use again) plus the hidden fees in these offers will negatively impact your finances & hurt your credit score in the long run! True.
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back to *pea*ality
Pearl Clutcher
Not my circus, not my monkeys ~refugee pea #59
Posts: 3,149
Jun 25, 2014 19:51:11 GMT
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Post by back to *pea*ality on Aug 8, 2014 20:36:26 GMT
My credit score is 840/850.
I have a Bachelors in Accounting but more of my work experience wasn't traditional accounting it was finance. I have used zero interest accounts free money many times out of necessity and transferred balances. It never hurt my credit. I pay off my credit card every month and don't pay interest.
I bought a large item that I could have paid cash for but they offered free financing. Since there was no incentive (a discounted price) I took the free money and instead of 36 months (the financing period) I paid it off in 35 months. You do have to watch because with these deals if you miss a payment or don't pay it off I within the financing terms all the accrued back interest will be charged to you.
But if there is free financing I take it and leave my invested funds alone.
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Deleted
Posts: 0
Oct 8, 2024 6:38:03 GMT
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Post by Deleted on Aug 8, 2014 21:35:01 GMT
I don't believe in credit card debt in any amount. I've never had it and never intend to. Even when we were struggling financially, we never had credit card debt. I'm not saying that YOU having debt is wrong, but it's not something I believe in. If it were me, I would pay off the credit card immediately or at least most of it, leaving some money in reserve for emergencies. Then I would put the house buying plan on hold for another year or two until I could afford to do it. This is just MY opinion and I don't mean to come across as harsh.
I don't think this is true. We've always had something on our credit cards...i.e. bills, but never carried any debt (we pay it off monthly) and our credit rating is excellent.
Good luck OP. I hope everything works out for the best for you.
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Post by disneypal on Aug 8, 2014 22:01:33 GMT
I would rather have more in savings. You can always work on paying down the debt but I like the comfort and security of having the savings
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mallie
Pearl Clutcher
Posts: 3,253
Jul 3, 2014 18:13:13 GMT
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Post by mallie on Aug 8, 2014 22:17:30 GMT
IMO, it's better to pay off the credit card asap because the interest rates are punitive while savings account rates are puny. That 22% extra you're paying is WAY more than the miniscule interest you're earning in a savings account.
Just to make it super simple:
Let's say you owe $10K.
You put the in credit card debt at 22%. That's $2200. The FIRST month.
You have $10K in savings. I just looked up what two banks in our area give for interest on a regular savings account. The highest % is .03%. That nets you a total of $3. The highest rate paid for a non-regular savings account (an "investor's indexed money market account") is .11%. That nets you a total of $11.
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melissa
Pearl Clutcher
Posts: 3,912
Jun 25, 2014 20:45:00 GMT
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Post by melissa on Aug 8, 2014 23:05:49 GMT
Not exactly true. I have never fully understood where this comes from. Credit card companies? We never carry a balance from month to month. Have not had a balance on a credit card in over 25 years. Our credit rating is completely unaffected. Why would you want to give money away if you don't have a choice?
In this situation, I would be making large payments on the credit card, if not paying it off entirely, and putting as much back into savings as possible. I would probably postpone buying a home as well until I had enough savings that a major repair (car or home) would not come close to wiping me out.
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Post by brina on Aug 8, 2014 23:37:01 GMT
Pay the credit card from your savings. Then each pay check pay yourself until your savings balance is back where you need it to be. In the long run you will have more money than keeping the savings and carrying the balance on your card.
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melirez
Junior Member
Posts: 51
Jun 26, 2014 15:46:38 GMT
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Post by melirez on Aug 8, 2014 23:42:08 GMT
I would absolutely eliminate credit card debt and even if it meant reducing savings. Credit card interest rates in most cases are always higher than the interest earned on savings. However, if you will be depending on your savings for your down payment and won't have it replenished by the time you intend to buy then you may want to maintain your savings account balance.
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Post by AussieMeg on Aug 8, 2014 23:47:31 GMT
I often hear the phrase "If you have a debt, you don't have any savings". Meaning that the debt far offsets any savings you have because the interest you are paying on the debt is way more than the interest you are making on the savings.
So I would prefer to have no debt than more savings.
Sadly I fail on both counts!
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Post by ShesaRenegade on Aug 9, 2014 0:10:20 GMT
As someone who just paid off her credit card last month, I can tell you that it feels AWESOME to not have credit card debt! Plus, I always hated giving the credit card money in the form of interest. Now I can put my money in savings and it's mine...all mine!!!
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Post by ShesaRenegade on Aug 9, 2014 0:19:27 GMT
Let's say you owe $10K. You put the in credit card debt at 22%. That's $2200. The FIRST month. Sorry, but this is not correct. Here's the real math to calculate your monthly payment: Average daily balance in a month $10,000 Days in a month: 30 Annual interest rate: 22% (0.22) Days in a year: 365 10,000 x 30 x (0.22/365) = 180.92 interest in month 1
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