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Established Member
Posts: 18
Registered: ‎05-14-2012
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Quick question about Balance Transfers...

Hello,

 

So I recently got approved for my first unsecured card with a $2000 credit limit (also my first unsecured non-store card so far)

 

I have two secure cards, both with $400 limits, and both of which are maxed out because of recent car repairs.  I also have an $80 balance on a gas credit card that I intend to pay off next week.  Anyway, I was recently considering consolidating the debt from the two $400 cards onto the new unsecured card, and I was just wondering if this was a good idea.  My thinking is that then I could keep the other two cards completely zeroed out, and only have to worry about one credit card bill per month.  Furthermore, instead of having two cards with 100% util, those two cards would go to 0% and the new card would only be at around 42% after the transfer and finance fee.  As well, one of the secured cards (a Wells Fargo card) is set to graduate at the end of next month, and I feel like I'd be more likely to be approved for a graduation if the card isn't maxed out.  The interest on the B of A secured card is 20.24%, while the interest on both the Wells Fargo card and my new card (A CitiForward college card) is 18.99%.  Like I said, I plan to fully pay down the $800 plus the 4% transfer fee within 5 or 6 months.  Would a balance transfer be a reasonable idea in this case?  I'd really appreciate any help!


Starting Score: TU: 633 EQ: 583 EX: 600
Current Score: TU98: 649 TU04: 664 TU08: 695 EQ: 616 EX: 643
Goal Score: TU98: 650 TU04: 680 TU08: 700 EQ: 650 EX: 650


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Valued Contributor
Posts: 1,597
Registered: ‎09-15-2012
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Re: Quick question about Balance Transfers...

Does the Citi have a promotional 0% interest period, or is the interest 18.99% right from day one?

I guess I usually think it terms of appropriate financial decisions, so I always do what saves me the most money. In this situation, since your BT wouldn't save you money on interest on one of the cards (assuming 18.99% really is the rate on the Citi), and the amount saved would only be $0.42 per month on the second card @ $400 - the BT fee isn't worth it.

All this changes if the Citi had a different interest rate.

In My Wallet: Amex BCP (12/12) $32,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Forward (12/12) $9,600

Last App: April 2, 2014
Established Member
Posts: 18
Registered: ‎05-14-2012
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Re: Quick question about Balance Transfers...

The Cities card has an interest rate of 18.99% from the beginning. However apparently because it's a college card, for every 3 months that you pay on time and stay under limit, they lower your interest rate by 0.25%.

Starting Score: TU: 633 EQ: 583 EX: 600
Current Score: TU98: 649 TU04: 664 TU08: 695 EQ: 616 EX: 643
Goal Score: TU98: 650 TU04: 680 TU08: 700 EQ: 650 EX: 650


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Valued Contributor
Posts: 1,597
Registered: ‎09-15-2012
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Re: Quick question about Balance Transfers...

Right. Ok - well my advice stands. I don't consider it worthwhile to transfer the balance financially. As long as you don't need new credit in the next 6 months, pay down those balances on the existing cards as fast as you can. Try not to put too much new spending on the Citi card so that you aren't just transferring the debt in that way. Paying in full is the best way to use credit cards - but they are certainly used well for emergencies also, which appears to be your situation.

Good luck. (Now bring on all the posters who disagree with me and think FICO management is the only worthwhile way to use cards.)

In My Wallet: Amex BCP (12/12) $32,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Forward (12/12) $9,600

Last App: April 2, 2014
Established Member
Posts: 18
Registered: ‎05-14-2012
0

Re: Quick question about Balance Transfers...

Thank you so much for your help!  I just had one more quick question.  I just checked my Wells Fargo account and it says that my interest rate is actually 22.99%, and not 18.99% like I originally thought.  I was just wondering if that has any effect on the advice that you gave me, or if you believe I should still follow the course of action you originally recommended? 

 

Thank you!


Starting Score: TU: 633 EQ: 583 EX: 600
Current Score: TU98: 649 TU04: 664 TU08: 695 EQ: 616 EX: 643
Goal Score: TU98: 650 TU04: 680 TU08: 700 EQ: 650 EX: 650


Take the FICO Fitness Challenge
Valued Contributor
Posts: 1,597
Registered: ‎09-15-2012
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Re: Quick question about Balance Transfers...


cowphin wrote:

Thank you so much for your help!  I just had one more quick question.  I just checked my Wells Fargo account and it says that my interest rate is actually 22.99%, and not 18.99% like I originally thought.  I was just wondering if that has any effect on the advice that you gave me, or if you believe I should still follow the course of action you originally recommended? 

 

Thank you!


Honestly, it doesn't change anything in terms of my advice. Your interest savings per month would still be well under $1.00, so you would need to carry a balance for over a year in order for it to be worth it. I would truly hope that you can get this all paid down sooner than that. 

 

Good Luck! And remember that the sooner you pay this down the more money you save and the better your credit score will be. 


In My Wallet: Amex BCP (12/12) $32,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Forward (12/12) $9,600

Last App: April 2, 2014
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