Seeking advice on card consolidation

[Anonymous]

Firstly, I want to thank everyone for their contributions to this forum. Its made a tremendous difference to the way I handle my finances, and signing up for myFico has been one of the best purchases I've made in a long time. Unfortunately, I dont know enough about credit to contribute much, and thus my first post is one seeking advice.

My FICO Score is ~730 and I have the following cards (In order of the length of time that I have owned them):

Card               Balanace              APR

CC#1              8300                     14%

CC#2              3400                     12%

CC#3              6000                     12%

CC#4              2200                      9%

CC#2 has a balance transfer offer of 4.9% until the balance is paid. It applies payments to the highest interest first.

I was considering transferring the balance of CC#1 to CC#2 but am unsure if this will hjurt my score in any way as I will have a higher usage ratio on the card ( greater than 47%).

If you all wouldnt mind, could you advise on whether I should transfer some or all of the balances to CC#2 under the balance transfer offer?

Thanks in advance for all of your help

[marty56]

Can you post the CL's for each account and CCC names.

Also I dont the CC#2 will pay the highest interest first.  Most CCC's pay the balance with the lowest interest first since they make more money that way.

Anyway, on the surafce I wouldnt do the BT unless CC#1 was close to being maxed out and CC#2 wont be after the BT.

Idealy you should try to get to 9% total util and if you can keep everything under 50% to start that would be a good 1st place to start at.

IMHO in terms of your FICO score, I wouldnt expect to see much of a difference in your score based on total util and if those are your only CCC's, then you probably wouldnt see much of an incrase increase in one less account reporting.  Also CC#1 might get closed as a result of the history which could lower your score.

CC#2 could get spooked if you increase your balance that much and do a CLD.

Bottom line the only way I would do this based on your information is if Iwas trying to save money.  In terms of FICO, I dont see much of an advantage in doing this based on the info you provided and I see several ways your score could go down as a result.

[Anonymous]

Thank you for your reply.

I verified whether the principal would be paid to the higher (or lower) APR's - and you were correct. Lower APR's first.

To give more detail:

CC#1 = BofA | CL = 15000 | Minimum Payment = ~200

CC#2 = CitiCard | CL =24800 | Minimum Payment = ~80

CC#3 = ChaseCard | CL = 12250 | Minimum Payment = ~120

CC#4 = DiscoverCard | CL =5100 | Minimum Payment = ~40

I can afford to pay ~1300 per month to these cards, and just want to pay them off already.

I am planning on buying a house withint the next 6 months, and just want to position myself the best way.

Thanks again for you help.

[marty56]

Others may chime in here but this is what I would do.

1,  Do The BT assuming that BofA wont get closed if it is an old account.

2.  PIF #4,  as soon as you can, minimum on the rest.

3.  Pay down as much of #3 as you can.  It would be greatto PIF it also since then your would have only one account with a balance under 50% util (If I did the math right) and then attack #2.

Having 1 card out of 4 reporting a balance would be great but 2 out 4 with one of them almost PIF is also good.

[Watchmann]

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mixxed wrote:

Card               Balanace              APR

CC#1              8300                     14%

CC#2              3400                     12%

CC#3              6000                     12%

CC#4              2200                      9%

CC#2 has a balance transfer offer of 4.9% until the balance is paid. It applies payments to the highest interest first.

---

Lots of ways to go here.  I'd pay off the lowest balance card first (CC #4), pay minimuns on the others.  Then I'd pay off CC#2.  AFTER that is done, I'd BT as much of the other ones as possible to CC#2 if the rate is still around 4.9%, and then pay off any amount that has not been transferred to CC#2.  Then I'd tackle the balance on CC#2 and pay it down as quickly as possible.

[TangMeister]

Where you stand right now, I wouldn't worry about the BT affecting utilization. You're at 55% util on card 1 as it is. So do the full BT to card 2, and you'll end up with 47% util on it, and a savings in simple interest terms of roughly $755 just from the BT if adjusted annually. That's $755 you can apply toward paying off the others.

Once the BT is complete, start paying down cards with one of the following strategies in mind:

1. Apply pmts across all cards, targeting higher utilization cards with more $$$ to drive your utilization per card down to the lowest % levels, thereby maximizing your FICO score's utilization points. This would probably be best if you have a mortgage on the near horizon.

2. Apply pmts to the higher percentage cards first, such as this order:

Pay off card #3. Then pay off #4. Then finally pay off #2. All things being equal, that will maximize your interest savings and $$$ toward debt reduction, but may not bring your FICO score up to the levels you wish as quickly as the first scenario, but tough to say.

It really is difficult to say how much your FICO scores will differ between the two scenarios above at a set point in the future, but most likely, with your utilization below 50% on all the cards, you're not going to gain that many points difference between the two scenarios. You can crunch payment scenarios in a spreadsheet and see where you're % utilization will be on the target date for a mortgage in both scenarios, and then take an educated guess.

Personally, I'd go with pmt scenario number 2 above, and pay the darn things off while maximizing my $$$ thanks to lower percentage interest rates being the last paid off. Just my two cents. Good luck!