Recently, my husband and I received a very large sum of money and wish to pay off our two credit cards totaling $20K. The remaining funds will be carefully invested.

While we do have a 2 year old mortgage of $240K, we have no other debt. We own both of our cars, our student loans were paid off several years ago, and we have both been very aggressive with our retirement planning as well.

Our Chase card has a 3.99% rate until the balance of 11K is paid off, and our Citi card has a 8.99% rate on the 9K balance. To date, we’ve been paying $300-400 over the minimum every month on each card, but now, due to this recent blessing, wish to wipe it out in one big swoop.

Is there an optimal time in the cycle to pay off these balances in full, and if so, will doing this have any effect on our high FICOs? On one site, I read that you should pay off a balance in full over a period of a few months rather than in one lump sum?

Thanks for all of your great advice. We visit regularly.

Living in Los Angeles, I constantly have to remember the culture difference between big cities like LA, NY, SF and the rest of the country…I rented until I was over 40 — and many, many people in big cities do the same thing because of the cost to buy a home…It always blows my mind when I listen to the Dave Ramsey show and I hear people who are 24 years old and make $30,000 a year, BUT THEY OWN A HOME! HUH??? Then I remember — the whole U.S. ain’t like LA…(or NY or SF or other big cities)

So no, not everybody “ALREADY has the home now,” as you say. I was making the choice between renting longer and jumping in — and I made the right choice though that first year of paying for remodels and property taxes, I didn’t think so…

So it’s a very valid question for a lot of people….

As for paying off the mortgage — I’m on the fence. It seems to make more sense if your home is a real “keeper,” not something you intend to keep for five years or less…

Thanks so much for the mention. I enjoy your roundups.
Take care!
Sharon