First Purchase, Large Purchase

[heirophant]

So, I just got approved for a new CC (Hooters) with a $3000 limit.  I have an old University bill that I need to pay to prevent it from going to collections.  It is $2025.  I have PIF my other cards every month, so I currently don't have a balance on any of my credit cards.  (1 Orchard $600, 1 HSBC $300, 1 Cap1 $500, 1 Cap1 $300, 1 GEMB/Care Credit $1000)  So, my utilization after making this charge won't be bad overall at 36%.  My questions are:

1. How will Merrick view this as a first transaction?
2. Should I call them in advance about this large transaction?
3. I obviously can't pay this all at once.  How would they view it if I pay it over a 4-6 month period?

I am probably making a big deal out of nothing, I just don't want to jeopordize my first large CL since my Key Bank chargeoff in 2005 ($7000).  Also, I have to do something about this bill.  I don't want anything to go to collections ever again.

[haulingthescoreup]

Your overall util won't be bad, but on this one card, you'll go to 67.5%, so obviously the more quickly you can get it below $1500, the better.

Merrick isn't AmEx, I don't think they'll be alarmed, but do you have any cash lying around at all? If so, can you either apply some to the old bill, so that you have to charge less, or some as a quick initial payment on the Hooters? I would have said to use it immediately as a payment on the new card, but some CCC's are insanely slow to get their account stuff set up to where you can pay. I had to call J.Crew/WFN for three weeks, begging them to set things up so that I could make a payment.

Merrick will be delighted for you to spread the payments out over 4-6 months, because they'll get some finance charge love out of you. I would still pay earlier than you need to, and more than you need to. In fact, if you're paid biweekly, I would pay something out of every single paycheck. Once their online account is set up, pay from there, so it will be credited more quickly.

I looked at their site (Merrick's) a half hour or so ago, and they state that they are there to help builders and rebuilders, so this won't seem odd to them. Just keep the money flowing their way, and everyone will be happy.

Congrats on dodging the collections bullet!

[Anonymous]

I think your choise is obvious if not payin will result in a chargeoff or worse.  Regardless of the outcome with the card.

[heirophant]

That gives me a bit more confidence.  I was thinking this would be a great way to start off with some points on the card anyway.  And yes, I do have about $500 at my disposal right now to make an immediate payment on the card when I make the charge, so I think I will go ahead and do that on Monday.  So, by the time it is reported, I guess it will only be 50% utilization on the card, and overall 27%.  Overall not bad.  Thanks for the advice.

[SmartCookie]

They will be very happy for you to use the card and I doubt there is anyone there waiting for you to PIF when you get the bill.

Is that University issue anywhere on your credit reports?  If so, remember to arrange a PFD.  I would not worry at all about UTI score drops in this circumstance, and it sounds like you intend to have it paid off within half a year... you will recoup any temporary loss.

Check out your Hooter card balance transfer offers.  You might get a better deal than using the card to simply pay off the old debt (if that is what you were doing).  Also be aware that they can cut the BT offer as a check to you and deposit into your checking account... then you can write a check to University if that is easier or if you are PFDing.