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Hi, All,
I'll try to keep this as short as possible.
A few years ago, I got into some serious trouble with my credit cards. My family lent me money to get out of debt, I've paid it all back, and I WAS paying off my cc bills every month. At last check, my credit was 693. (Not great, I know, but improved.)
I have had some major medical bills lately, both for myself and my pet. For the first time in a while I am carrying a balance on one of my cards, with a debt/credit of around 35%. I hope that through some spending cuts, I can pay it off in a few months.
Recently, I was on the phone with my bank and they suggested I apply for their rewards VISA. Usually I don't allow myself to be "upsold" but I currently get no rewards from my Mastercard and I only get flight miles on my AMEX (and I rarely fly), so I took a chance and applied. I was accepted and given what I think was a very generous amount of credit, most of which I hope to never use.
Questions:
I'm wondering how this will affect my other credit cards. I know that this will increase my available credit and improve my debt/credit ratio, which is good, but will the issuers of my other cards (American Express and Capital One) look at it as, "She as far too much credit now" and shut me down? (For the record, my AMEX has almost no balance on it right now.)
Should I cancel the Capital One Mastercard, which will leave me with as much credit as I had before I was approved for the new card? (The bank Visa and the Mastercard have the same limits.)
Most importantly, I plan to transfer my CO Mastercard balance to my new Visa, since there's a 6-month "no-interest" balance transfer and I'm almost sure I can pay it all off in less than 6 months. If I do this, will I be sending a message to CO that I won't be using their card, and would they cancel my credit based on that?
Thanks for any suggestions.
Since the downturn I haven't heard of anyone getting adverse action for having to much credit. Now if you apply for a lot of cards in a short time some lenders with AA (namely Barclays) Also getting turned down for cards due to to much available credit is extremely rare. As long as you are using your credit responsibly most lenders could care less how much credit you have available from other lenders. Most are just concerned with how much exposure they have. With you lines you haven't even began to get to the point of having to much credit unless the CU gave you a $50k card. Many here have CL's double their annual income.
I would guess that as long as your income can support the monthly payments on all 3 cards, you should leave all three open for a couple reasons - it will lower your overall utilization with only the one CC reporting a balance, the age of your accounts will not be hit too hard by the opening of one account with the other two still open, and it will show responsible use of CCs by having three open trade lines. I would NOT close the Cap One card, although I may ask them to remove the annual fee, if you have one.
That said, using the BT option shouldn't send a message to CapOne that you want to close the account. It's done daily by lots of people who continue to keep their cards open. I would continue to use (and pay almost immediately) the Cap One card for occasional expenses - like dinner or a tank of gas - just to show some activity on the card each month. Three open cards with minimal debt shouldn't incur any financial review or closed by grantor type actions - it's a minimal number of cards compared to many people around here (myself included).
Congrats on the new VISA and the 0% interest - that can really be a good, helpful way to pay down your debt!!
Welcome to the forums!
Honestly, in terms of managing your credit I think you're doing a fantastic job.
Getting a new account, and transferring the balance; if that kicks a ~20% APR to the curb for a 0% promotional offer, take it and don't look back. This sort of thing happens all the time, and banks don't care much (as long as you don't continue transferring it around, and are making progress paying it back... which sounds to be the case). No need to close the existing card either.
If the balance isn't trivial (my definition of such, being able to write a check for it within a few months), then it's likely a large financial win, and that's exactly what one should be using their credit report on new applications for.
You do not need to cancel any of your cards, unless the annual fee no longer makes sense to you.
Your other creditors are not likely to think you have "too much" credit - quite the contrary: they generally like to see that you are considered trustworthy by other creditors.
You will be considered risky when you carry 66% utilization for three consecutive months. That is an early marker for someone who is more likely to declare bankruptcy in the next 24 months.
There are lots of people on this forum, who think that piling-up lots of credit cards is a good thing to do - but they are completely clueless about the FICO Bankruptcy Risk Score, and then they act shocked when their credit lines are reduced or even cancelled.
Just keep your total utilization down to managable levels, and you should be fine.