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balance transfer

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Anonymous
Not applicable

balance transfer

i recently initiated a balance transfer of 10,000  from a 17 percent interest car loan to a brand new citi ty preferred card offering 0 percent for 18 months, and another 2000 from miscellaneous cards over as well, my question is, will this hurt my credit score more by doing this, because the credit limit on the citi card is 16,000.00, and this will put my utilization very high .  It almost seems like a catch 22, if i don't do it, i'll continue to pay outrageous interest, if i do i'll take a major credit score hit with a 75 percent utilization on a very high limit card.. does anyone have any experience with a similar matter, and if so how much of a hit am i looking at?

Message 1 of 11
10 REPLIES 10
Anonymous
Not applicable

Re: balance transfer

How much of a hit is based upon your overall credit profile, and available revolving credit.

 

You did move installment debt over to revolving debt, and that is scored differently, so you WILL take a hit for it, but if your saving money and it helps you pay off the debt faster, it sounds like its worth it.

 

Your credit will recover, especially as you pay down your revolving debt.

Message 2 of 11
Anonymous
Not applicable

Re: balance transfer

before the transfers of 10,000 of the car loan over to the card, my overall utilization is now at 6 percent... of 50,000... adding the 10 grand i believe will put that closer to 23 or 25 percent utilization.  I just hate taking a hit on score, it took me a lot of years and hard work to get my scores where they are.  i'm at 747 eq, 761 trans, and 715 exp.  these are my real fico's. i know theres no way around it, and i'll save like 2500 in interest by doing this.

Message 3 of 11
Anonymous
Not applicable

Re: balance transfer

I would say it was a good way to make your scores work for you. I would have done that same in your situation.

 

Your scores should see a minimal hit under 30% revolving util. I would estimate about a 10-15 point hit until you get down below 10% again.

Message 4 of 11
Anonymous
Not applicable

Re: balance transfer

If I might inquire, your scores put you in a prime position to re-finance your car loan...why didnt you go that route instead?

Message 5 of 11
takeshi74
Senior Contributor

Re: balance transfer


@Anonymous wrote:

does anyone have any experience with a similar matter, and if so how much of a hit am i looking at?


Difficult to say but if you do the math (and assuming that the card was at 0 before the BT's) that puts you at 75%.  You'll want to get that down as quicky as possible to avoid adverse action.  In any case, finances matter more than your score.  Your score can recover from short term high utilization.

 


@Anonymous wrote:

If I might inquire, your scores put you in a prime position to re-finance your car loan...why didnt you go that route instead?


Wondering this as well.  OP presented only two options but refinancing was a possiblity as well.

Message 6 of 11
MarineVietVet
Moderator Emeritus

Re: balance transfer


@takeshi74 wrote:

@Anonymous wrote:

does anyone have any experience with a similar matter, and if so how much of a hit am i looking at?


Difficult to say but if you do the math (and assuming that the card was at 0 before the BT's) that puts you at 75%.  You'll want to get that down as quicky as possible to avoid adverse action.  In any case, finances matter more than your score.  Your score can recover from short term high utilization.

 


@Anonymous wrote:

If I might inquire, your scores put you in a prime position to re-finance your car loan...why didnt you go that route instead?


Wondering this as well.  OP presented only two options but refinancing was a possiblity as well.


Amen to that.

Message 7 of 11
Anonymous
Not applicable

Re: balance transfer

I would have loved to refinance but the car was too old...it was a 2005 with like 26 000 miles...haven't been able to find any refinancing company that will refinance a car more than 7 years old
Message 8 of 11
Anonymous
Not applicable

Re: balance transfer

Most credit unions I have seen terms for will go up to 10 years.

 

The big caveat being that the car needs to be worth more than or equal to what you're asking. I can't imagine most 9 year old cars being worth 10k, so I can see your conundrum.

Message 9 of 11
Anonymous
Not applicable

Re: balance transfer

17% car loan is very high. I am no expert with car loans, but that is like 10 times the interest rate I paid for my car loan. I realize 4-5% can be standard at times, but 17% is very high. Transferring it to a 0% card is probably worth it. It's unusual though for you to get approved for a 16k 0% APR card (i.e. good credit likely) and only get a 17% auto loan (i.e. less than good credit likely). 

 

You new utilization is under 30% but over 10%. It will hurt your score slightly. You also have high utilization on one card (12/16k), which will hurt your score a bit as well. Neither should make a huge ground-breaking change to your score since your overall utilization is under 30%. 

 

I am usually not a fan of revolving debt. In your situation, I would have first tried to refinance with a low interest auto loan. If your only choice was between a 10%+ installment loan or a no interest CC though, the CC starts to make sense. Just make sure you pay that balance in full before the intro rate expires or make plans to extend the rate  or move the funds somewhere else once the intro rate expires. 

 

 

Message 10 of 11
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