Should i do the balance transfer?

Anonymous · ‎08-23-2016

Okay so here's my situation, I was recently offered promotional balance transfers through discover (my oldest credit card) 2 offers, 1 of 0% APR for 15mo w/ 3% balance transfer fee..
Or
4.99% for 21mo no balance transfer fee.

My cap on my card is 11300, I currently have 10424 available, I'm considering transfering all of my other cards to this one, which would be trasfering about 3350 (a little less in reality)

This would give me 3 credit cards with a 0 balance and only 1 credit card with a running balance, which would be about 4300. (i little under 40% utilization)
My question is is it worth it? Also would I better off to use the balance transfer check, into my checking and then make the credit card payments or just transfer the balances directly? (discover states there is no cash advance fees associated with balance transfer check.)
Also one last thing, can write the balance transfer check for more than my cash advance limit on that card?

Thanks so much sorry for the long post,

jwduke · ‎08-23-2016

I don't think I would want to take the hit of 40% utilization on your CR... that may cause CL drops on your other cards (Syncrony is famous for this!)

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Current Score: FICO- 798 (02/21/18)
Goal Score: 800+ All Three

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Anonymous · ‎08-23-2016

I'm not sure I fully understand your comment..
3 of 4 cards would be at 0 balance.. 1 would be at about 40% utilization... Over all CR would show about 16% utilization across all CC accounts.. Syncrony would be one that would go to a 0 balance along with Chase and cap one... Discover would take the hit.. How would that cause CL drops?

jwduke · ‎08-23-2016

You would have the one card with a 40% utilization rate... I have a card with Nebraska Furniture Mart, that a few months ago had a 36% usage rate, and I am at 4% usage on all of my cards, total. Well my credit score (FICO 8) dropped from 777 to 737. I am now under the 30% mark on my NFM card, so I hope to see my cred score go up!

Starting Score: 675
Current Score: FICO- 798 (02/21/18)
Goal Score: 800+ All Three

Take the FICO Fitness Challenge

Anonymous · ‎08-23-2016

Ah I see, but the reality is utilization wouldn't be changing all that much from what it right now on my CR (due to the lag in the report showing recent CLIs and a new account.)

Anonymous · ‎08-23-2016

So in your opinion would it be worth it if I could do it and have my new balance not exceed 30% utlization on that card, because it would then give me 0% interest on that balance w/o affecting the scoring utilization as much

jwduke · ‎08-23-2016

Absolutely yes, but remember, the CC issuer is hoping you DON'T pay it off in the time frame of the 0% offering, so that they can collect all of the accrued interest.

Starting Score: 675
Current Score: FICO- 798 (02/21/18)
Goal Score: 800+ All Three

Take the FICO Fitness Challenge

lhcole77 · ‎08-23-2016

I say do it if it makes financial sense to you.

I also know from personal experience that the fewer accounts that report a balance, the better. Even if one card is over 40%.

My scores have always increased when I've had fewer accounts report, all the while I've had a BT card reporting over 50% UTL.

lhcole77 · ‎08-23-2016

@jwduke wrote:
Absolutely yes, but remember, the CC issuer is hoping you DON'T pay it off in the time frame of the 0% offering, so that they can collect all of the accrued interest.

Interest is paid on unpaid balance at the end of promo, not accrued

takeshi74 · ‎08-23-2016

@Anonymous wrote:
Should i do the balance transfer?

There are online calculators out there that you can use to help you determine the interest you'd pay with each option. Make use of them to help you in your decision. If the calculator does not consider the BT fee then make sure you account for that as well. You also need to consider the revolving utilization on the card you're transferring to and how long it will take you to get it down and how long it will take you to pay it off. Number of balances has a smaller impact than revolving utilization but score concerns are the least of your problems at this point. You can worry about score once you've paid off the ervolving debt you're carrying.

You just have to do the math and compare. Are there specific things that you don't understand that you need help with?

@Anonymous wrote:
Also would I better off to use the balance transfer check, into my checking and then make the credit card payments or just transfer the balances directly?

Doesn't really matter. Timeframe may vary with one option versus the other depending on details but either way the balance gets transferred.