we never live with credit cards before. and now we have 5000$ on our credit cards that we cant close . we are doing a min paymant every month and trying to pay more than that. we will have a bonuce 7000$ at the end of the year. will it be beter to pay to credit cards at onece. or there is another way to pay credits(and put this bonus on investment).
I read about calling to creditors and talking with them, so they will give a 10-20% of if we will pay it atonce, but will it afect in bad way to our credit report.
Sorry for wrong English writing.
2006-11-22 07:17:34 · 10 answers · asked by armn2ka 2 in Business & Finance ➔ Credit
Will caling a creditor afect on credit report badly?
2006-11-22 07:27:03 · update #1
Deffinatley pay out your credit cards! Dont put your bonus in an investment, as theres pretty much a nil chance of earning more interest on your investment for such a small amount of money than you are paying for the cards. As far as im aware, you can get 'pay-out' figures that can be substantially less than what you actually owe, and it doenst affect your credit rating. However, if you havent been making payments on the cards, or if they have been send to a debt collector, your credit rating is most likely already affected.
2006-11-22 08:13:55 · answer #1 · answered by kjay 6 · 0⤊ 0⤋
Negotiating debts to be paid for less than the amount owed does adversely affect your credit. How much? Who knows.
I wouldn't do it if your credit is good.
As for what to spend the bonus on; pay off the debt. As a rule of thumb, if the interest on the money borrowed is more than the rate of return on the investment, and it always is, you have to pay the debt.
For instance: if you have a 0% for 1 year card for $50,000 you could buy a six-month CD and keep the interest paying off the debt at the end. That would be wise.
If you are carrying a $5000 card with a $150 payment you would have to make more than $150 per month on your investment of the same amount for it to make sense.
You should pay off the card, invest the remaining $2000 and apply what you would have paid to the creditors as a monthly investment in addition. Look up Dollar-Cost Averaging.
In the long run you'll be better off.
2006-11-22 07:26:03 · answer #2 · answered by Jeff 3 · 1⤊ 0⤋
Pay off the credit cards first. Forget all fancy shmancy formulas about interest rate and return on investments. Paying off the debt is guaranteed return on on your investment -- that is the interest you save. Now, bonus is not taxed at 39%, that's a myth. It's just the formula that calculates the federal tax on each paycheck analyzes the amount of paycheck to figure tax. That is if you get 26 paychecks a year and each of them is $3000, then they are taxed as if you make 78K per year, but the check that will have a bonus will be taxed as if you were making Bonus x 26 per year. So, yes they will withhold more tax than they should, but when you file your income tax return you will get amount of overpayment back, unless you were underpaying all year. But all that besides the point. In short pay off the credit card debt, but do not cancel it, just put it away and stop using it. Canceling too many cards may also adversely affect your credit rating, as lenders want to see that you have available credit but not use it or use it wisely.
2006-11-22 07:37:58 · answer #3 · answered by Alexander K 3 · 0⤊ 0⤋
Pay off the credit cards!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Don't invest a penny in anything else until they are gone and never use them again.
Also you should probably know that if this is a work bonus they are taxed at 39(!) percent so you won't really end up with the full $7000.
Asking for a payoff is great and shouldn't affect your credit.
2006-11-22 07:27:21 · answer #4 · answered by AerynneC 4 · 0⤊ 0⤋
At the minimum payment, you will take 20 years to pay off the credit card balance even if you add nothing more to it.
You should cut up the credit cards and look for a way to borrow the money to pay them off. The interest cost to you is going to put you under unless you pay them off completely.
2006-11-22 08:20:58 · answer #5 · answered by united9198 7 · 0⤊ 0⤋
Pay off your credit card bills. Why pay all the interest on them with the minimum payment each month.
If you must invest it, then transfer your credit card bills to another card that offers free balance transfer with 0% interest for a year. Keep doing that until they are paid off.
2006-11-22 07:20:11 · answer #6 · answered by ebush73 5 · 0⤊ 2⤋
pay the credit cards, then cancel them, and then consider making an investment, if u make an investment and leave ur credit cards delinquint, then they could come after your investments, smart to pay off bills first
2006-11-22 07:21:49 · answer #7 · answered by Kollege Gurl 2 · 1⤊ 0⤋
Pay it all on the credit card....the interest alone is kill you....investing it would be like...trying to win money at gambling to pay the rent, when you had the rent money to start with....Pay all of it toward the cards.
2006-11-22 07:20:34 · answer #8 · answered by Lovely B 3 · 2⤊ 0⤋
pay them off in full, and invest the rest. Yes it will affect your credit negatively if you take that discount. It will also take you forever to pay them off by only making the min. payment. so pay them in full
2006-11-22 07:41:15 · answer #9 · answered by Sara 4 · 0⤊ 0⤋
pay the credit cards off and if you pay now they should give you some off. If you do pay them off now then you dont have to worry about them anymore.
2006-11-22 07:26:06 · answer #10 · answered by ? 4 · 0⤊ 0⤋