Using credit cards...

Anonymous · ‎10-07-2015

I have to pay a fairly large tuition bill next week that I will not be able to PIF before the billing cycle ends. Is it better to pay using one credit card (i.e. Venture or DCU would cover it) or spread the payment across 3-4 cards. The answer may be obvious to some here but I don't see the "obviously" part. My college has already told me they will accept multiple payments across 3-4 cards but it all has to be same day or before. What do you think? I would bet that other people have asked this when buying a big ticket item.

Anonymous · ‎10-07-2015

I like to keep things simple so I would put it all on one card. Having said that I have a couple questions.

If it goes on one card would that card be maxed out?
How long before you can pay the balance completely? I cant really tell if you plan on carrying the balance for a few months or plan to pay it off during the next cycle.
Will you have to pay interest?

I dont see the advantage of spreading it out since you'll have multiple payments to keep up with but I could be missing something.

Anonymous · ‎10-07-2015

If your credit score is not a big deal to you over the time it will take you to PIF, the best financial decision is to put it all on your lowest interest card. If you can pay 70% off but not in full before next statement cuts you don't have to pay double interest (since you have already been charged interest on your loans and you don't want to be charged cc interest on top of that if you can avoid it).

If you care about your credit score over the next few months it takes to PIF (I would only worry about this if you're planning to app for something), then spread it across a few cards. all less than 30% UTIL, pay the higher interest ones to 0 and leave the balance you can't pay on the lower interest cards. That will impact your score the least.

Anonymous · ‎10-07-2015

I meant you won't have to pay that 70% in additional interest. Obviously any amount you can't PIF (in either scenario) you will pay double interest on - the initial interest charged on the loan and then the cc interest. Try to minimize that if you can.

UncleB · ‎10-07-2015

@Anonymous wrote:
I have to pay a fairly large tuition bill next week that I will not be able to PIF before the billing cycle ends. Is it better to pay using one credit card (i.e. Venture or DCU would cover it) or spread the payment across 3-4 cards. The answer may be obvious to some here but I don't see the "obviously" part. My college has already told me they will accept multiple payments across 3-4 cards but it all has to be same day or before. What do you think? I would bet that other people have asked this when buying a big ticket item.

This is really a personal preference issue, or more specifically, a personal situation issue...

If it were me, I would appreciate the simplicity of only carrying a balance on one card (assuming you could continue to PIF the others). In this case, I would prefer to (obviously) use the card with the lowest APR, since it's not likely you're chasing rewards on this purchase.

You may have other considerations, for example the credit limits of your cards, and even the anecdotal habits of the specific lenders. For example, some folks prefer to not leave a Amex revolving account with high utilization; other's feel it doesn't matter. With this in mind, it's generally universally accepted that Capital One doesn't seem to "mind" if someone carries a substantial balance on one of their cards. With this being said, your Venture might be a good card to consider; possibly the 2% you'll earn from the transaction will cover the majority of your interest charges until you can pay it off. Again, if you search the threads here you'll find lots of back-and-forth on if rumors about what various issuers "like" should even be a consideration... I only mention it here as a data point.

If you're history and utilization over your accounts as a whole are both in good shape, you shouldn't have anything to worry about in any case.

Edited to add: If you decide to use your Venture, give Capital One a call and tell them you're considering using your card for a large purchase, and ask if they have an APR promotion they can add to your account. Usually they can lower your APR by a few percentage points, generally for six months. This has worked for me before even when there were no other "offers" available... every little bit helps!

Anonymous · ‎10-07-2015

Keep in mind, any card you don't pay the previous statement balance on-- you don't want to be charging to because you'll be charged interest as soon as you charge (if it's not in a 0% on purchase promo. When people on here say PIF, I'm never sure if they mean PIF the way 'normal people outside of myFico' mean it, where you'd pay the 10/7 statement in full by 11/4 or something, or if you mean pay to $0 as many folks here do to maximize your score. You can avoid interest by doing the former. The latter only maximizes your score, which as has been said, if you're not planning to apply for anything this shouldn't be your main concern.

Another thing to consider besides which card(s) you'd like to continue to have use of, is when various cards statements cut, if you are going to be able to pay it off soon, but not immediately. You might want to try to maximize your grace period. For example, if your Venture just closed 10/6 and your DCU won't close until 10/20, then all else being equal, you'd want to put it on your Venture because it won't show on your statement until 11/6 and won't be due until about 12/3. Whereas if you put it on your DCU it would show on your 10/20 statement and would be due about 11/17. To me, where DH and I are both paid monthly, this would mean a whole 'nother month's pay and would make a big difference.

Anonymous · ‎10-07-2015

From an immediate score perspective, it is better to spread it out, rather than have one card skyrocket. However, once you pay it down, it won' tmake a difference. I encourage you to ignore the short term score effect issues.

If you have any cards with 0% APR periods, I would use those first, then use your lowest APR, etc., etc. However, you might find that a loan would be a better option than a credit card. You might even be able to work with your school for a short term installment payment set.

takeshi74 · ‎10-07-2015

@Anonymous wrote:
IIs it better to pay using one credit card (i.e. Venture or DCU would cover it) or spread the payment across 3-4 cards. The answer may be obvious to some here but I don't see the "obviously" part.

All depends on the impact to your revolving utilization and how long it would take you to pay it down/off. Anything above 30% is high. Utilization isn't just a scoring factor. It's a risk factor as well. Prologned high utilization can lead to adverse action.

If the transaction isn't that high relative to the limit of one card and you can pay it off quickly it's no big deal to charge it all on one card. If you need to spead it out to keep utilization within reason then that may be a better option. If even afer spreading over multiple cards you end up with high utilization and it's going to take a long time to pay down then you may in trouble even with splitting.

It's not necessarily obvious to anyone but if you know the standard factors and other info on how credit is scored and how credit risk is assessed then you can determine which course of action is likely to be the better option. There really isn't one single answer that applies to every situation for a big ticket purchase. On top of that, big ticket is highly subjective.

This is just a starting point. It won't tell you everything but it does cover the common factors.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Anonymous · ‎10-07-2015

@takeshi74 wrote:
@Anonymous wrote:
IIs it better to pay using one credit card (i.e. Venture or DCU would cover it) or spread the payment across 3-4 cards. The answer may be obvious to some here but I don't see the "obviously" part.
All depends on the impact to your revolving utilization and how long it would take you to pay it down/off. Anything above 30% is high. Utilization isn't just a scoring factor. It's a risk factor as well. Prologned high utilization can lead to adverse action.

If the transaction isn't that high relative to the limit of one card and you can pay it off quickly it's no big deal to charge it all on one card. If you need to spead it out to keep utilization within reason then that may be a better option. If even afer spreading over multiple cards you end up with high utilization and it's going to take a long time to pay down then you may in trouble even with splitting.

It's not necessarily obvious to anyone but if you know the standard factors and other info on how credit is scored and how credit risk is assessed then you can determine which course of action is likely to be the better option. There really isn't one single answer that applies to every situation for a big ticket purchase. On top of that, big ticket is highly subjective.

This is just a starting point. It won't tell you everything but it does cover the common factors.
http://www.myfico.com/crediteducation/whatsinyourscore.aspx

+1