Help me make a plan? Thanks! :)

Anonymous · ‎06-21-2015

A lot of things have happened since I last signed in here that have changed my life circumstances quite a bit, so I need some advice about my credit card accounts/utilization, etc.

Here’s the rundown so that you’ll get an idea:

Kohl’s: 2000 CL, 0 balance
Macy’s: 2100 CL, 0 balance
Barclay’s Barnes & Noble MC: 1000 CL, 0 balance
Paypal Credit: 3500 CL, 0 balance
Chase Flexible Rewards: 4000 CL, current balance 920
Target: 2000 CL, 0 balance
Citi TYP Visa: 4000 CL, current balance 850
Citi Double Cash: 5000 CL, current balance 145
Capital One Venture: 10,000 CL, 0 balance
Capital One QS: 4250 CL, 0 balance
Amex BCE: 20,000 CL, 325 balance
Discover Miles: 17,500 CL, current balance 7000
Chase Freedom: 1500 CL, current balance 500
Justice Federal Credit Union Platinum Visa: 10,000 CL, 0 balance
Bank of America Better Rewards: 7000 CL, 0 balance
Sallie Mae World Mastercard: 1600 CL, 0 balance

Most of the cards that have a balance on them currently are bills that I would simply pay anyway (such as car insurance, mobile phone, etc., that kind of thing), or are going to be paid off completely in the next couple of weeks (for example, that Freedom is paid as of next week, flat out). However, that Discover card is, quite obviously, the anchor dragging me down. It’s an old card with very old purchases and I never really paid much attention to paying it off completely before this, being content to just “let it ride”, especially with the limit on it. However, my husband DESPISES Discover, especially the APR rate that I have on this account (he considers it “extortion” level) and he’s determined that we pay it off and dump it altogether. I have to say that I concur, as I don’t really use it anymore.

My utilization rate, according to my calculations, is somewhere around 11 percent across the board, but that Discover card alone, it’s quite obvious that the util is high, higher than I want, anyway. Would it be beneficial to do a couple of balance transfers onto some of the higher limit cards (i.e., Justice FCU, Bank of America, Venture, etc.) and spread out the amount owed so that the util rate on Discover drops? We’re not spending anything more than what we already have currently (most of the cards are being used for monthly bills that we would normally owe anyway), so the overall util rate won’t rise. I figure that if I divide the balance between cards, it’ll be quicker to pay it all off because it won’t seem like such a huge wall to overcome, if that makes sense.

My ultimate goal is to purchase a new home in a couple of years, as we have a new baby and our current home is honestly way too small to accommodate a new child. I also have student loans that are currently in a grace period but will activate in December, so I want to prepare for that as well. We’re well on our way to wiping out all CC balances (though it may not look like it by this account), so I want to make it easier to get that done faster. Any advice, or am I on target with this plan?

Annual income is 84k, scores are currently in the high 700s, if that matters.

Edited to add: I want to try not to put a balance transfer on my Amex, because that's the card we use the most (groceries, gas, etc.) and I'm vigilant about PIF'ing that particular one every month.

Thanks in advance.

Closingracer99 · ‎06-22-2015

If you discover card has a 0% APR I wouldn't put much thought into it imo. Overall util % is still pretty good.

My Cards: Amex BCE: $9,000, Amex Hilton HHonors: $2,000, Amex ED: $12,000, Barclays NFL extra points: $3,000, Bank of America MLB cash rewards: $17,000, BBVA compass NBA Amex triple double rewards: $17,000, Chase Amazon: $1,000, Chase Freedom: $9,000, Chase Sapphire: $5,000, Chase Slate: $5,000, Chase Disney: $4,000, Citi Double Cash: $5,400, Citi AA plat: $5,500, Citi Simplicity: $3,000, Citi Thank you preferred: $8,800, Capital one GM: $2,000, Capital one PlayStation: $3,000, Gamestop: $1,150, Amazon Store: $5,000, Ebay MasterCard: $5,000, American Eagle Storecard: $750, Macy's: $500
EX: 744, TU:750, EQ: 740

Anonymous · ‎06-22-2015

It's only at 40%, which imo is not at all worth paying balance transfer fees just for the sake of lowering the utilization.

I'd only consider the monetary cost - can you BT some of it onto cards with lower APRs, to save you money in the long term? If not, just pay it down as is, unless you're sure that splitting up the balance will motivate you to put more money towards paying it down faster.

Anonymous · ‎06-29-2015

Just getting back to this, sorry.

I have a BoA Better Rewards card with a 0% APR BT offer until July of next year, so I was hoping to maybe transfer half of the balance from the Discover onto that in order to save a little money, but.... if it's not worth considering, I may not bother. As you say, it's not THAT high, but 40% util on one card kind of bothers me....

No BT fees on the BoA, by the way, which is also an incentive. I do think that splitting up the balance onto different accounts will motivate me to pay it down faster because it doesn't LOOK so overwhelming. It's the same exact amount, I know, but two 3500 dollar balances "look" better than one big 7000 one.

Current APR on Discover is 19.99 - a little high, but it's not AWFUL. My husband, on the other hand, is convinced that it's outright extortion. Not sure of why he's thinking that, as I have a couple of other cards that are actually worse (some of my older lines push 25 percent plus - but there's a reason I don't use those anymore, hah).

My main focus is to start "cleaning" and prepping for a mortgage try in a couple of years. I could do it now, my scores are high enough, but I want to save enough for a decent DP and get a house that we WANT as opposed to what we can theoretically afford right this minute. Also, I'm not sure of how much those student loans are going to run me, so the less debt I have on my shoulders when it hits, the better.

Anonymous · ‎06-30-2015

If you have that BoA Better Rewards with 0% APR on BTs then i'll say go for it. It'll save you a lot of $$$ on APR Fees on the Discover (that must be charging you around $100 per month on APR Fees!). And I agree with you on how it can motivate you to pay it off faster. Two $3,500 Balances is indeed better than one whopping $7,000!

Anonymous · ‎06-30-2015

@Anonymous wrote:
I have a BoA Better Rewards card with a 0% APR BT offer until July of next year, so I was hoping to maybe transfer half of the balance from the Discover onto that in order to save a little money, but.... if it's not worth considering, I may not bother. As you say, it's not THAT high, but 40% util on one card kind of bothers me....

No BT fees on the BoA, by the way, which is also an incentive. I do think that splitting up the balance onto different accounts will motivate me to pay it down faster because it doesn't LOOK so overwhelming. It's the same exact amount, I know, but two 3500 dollar balances "look" better than one big 7000 one.

Oh then now you should absolutely take advantage of it - no BT fees and 0% APR for a year... that'll save you bunches of money!

What's the limit on the BoA? Because the more money you move onto it, the more money you save by getting it out of that 19.99% APR. Since it's 0% I'd just try to put as much as you're comfortable with onto it, even if it means the card is at 70-80%. If you need help feeling comfortable with a high % utilization, I'd do the interest calculations to see how much you'd save, and that might motivate you. Every $1000 you take off the discover card will save you $200+ in interest over a year.

Then I'd put majority of the money towards paying off whatever balance remains on the 19.99% discover, to save interest. Once that's paid off, then begin paying down the balance on the 0%.

And good luck finding/buying a nice house!

dragontears · ‎06-30-2015

Have you tried calling Discover and asking for an interest rate decrease? Some people on this forum have had luck getting a 0% interest period when asking for a interest rate reduction from Discover. that could save you a bundle in interest charges and help you pay it down faster.

Anonymous · ‎06-30-2015

@dragontears wrote:
Have you tried calling Discover and asking for an interest rate decrease? Some people on this forum have had luck getting a 0% interest period when asking for a interest rate reduction from Discover. that could save you a bundle in interest charges and help you pay it down faster.

actually that is not entirely true. We have a discover card. And if you ask them for the interest rate, they will more than likely give you 0 for 1 year, but it is only for new purchases.

The reason why I despise discover is, they will not let a person at least have the option to choose how their payments are applied (yes I am aware many cc's are like this now a days and yes for the avg consumer it does help). Only what you pay over the minimum will apply to the higher interest charge. So asking discover for a promo probably wont help.

The OP should definitely BT the discover, at least part of it. I would see if BOA will give you a CLI so you can xfer the whole sucker in one fee free transaction and pay that puppy down fast.

Anonymous · ‎06-30-2015

@Anonymous wrote:
@dragontears wrote:
Have you tried calling Discover and asking for an interest rate decrease? Some people on this forum have had luck getting a 0% interest period when asking for a interest rate reduction from Discover. that could save you a bundle in interest charges and help you pay it down faster.
actually that is not entirely true. We have a discover card. And if you ask them for the interest rate, they will more than likely give you 0 for 1 year, but it is only for new purchases.

That makes sense. Why would they just voluntarily give up earning 19.99% on a balance, just to be nice?

Anonymous · ‎06-30-2015

@Anonymous wrote:

What's the limit on the BoA?

The BoA limit is 7k, which is EXACTLY the amount on the Discover. Figures, right? LOL! I could transfer the whole thing but that would put the BoA at 100% util - nooooo, not a good thing, especially since BoA was my last holdout (I had burned them previously and it took 11 years for them to forgive me!). I'd like to maintain a relationship with them even after I pay it off!

I' m okay with transferring a portion of it, since I have other cards that I could move some to. My Justice FCU card is 10k with a 9% APR and a zero balance so that's also an option if I wanted to get it out of there. I also had a recent BT offer on one of my lower APR Citi cards that I could look into (can't remember the details offhand, though, I have to see).

I could transfer it to the Venture but I don't have a great APR on that one (I think it's 14 percent, which isn't as good as some of my others).

I have tried calling Discover over and over again to get that rate lowered, and while they've been nothing but pleasant and polite to me, the answer has always been a flat no. So....yeah, not going to try again. It's a disappointment, because Discover was the first lender to give me a high limit - I started out at 9900 CL when no one else would even look at me - and I tend to reward that kind of loyalty, but the APR rate really is too much, especially now that you all (and my husband) has helped me figure up some math. I really AM paying way more than I should.

I could try asking for a CLI on the BoA, but I have a LOT of INQ now, so I think I may want to try and lay low for a bit.