Help with balance transfers

[Anonymous]

Okay, I need help here. I'm kinda new to credit cards, so I don't know what affects my credit. However I have noticed ever since I got credit cards my credit rating has dropped. I used to have credit of about 700. Last month when I signed up for CK I had a 681 and now it says its 671. From what I been reading its probably because my cards are close to being maxed out. I used to think as long as I'm never late on my cards even if I paid the minimum it would help my credit but I've learned now I am wrong. I currently have two cards. A Discover card that has $2,000 limit and I only have 11 dollars available. I also have a Citi bank card where I have used up 772.00 of 1,000 available dollars. I'm already paying interest on both cards. On my discover card I have a 19.99% on my citi card Im not sure of my percentage but I believe its 19.99 also. CK recommended to me to get a Chase Slate card which has no APR for 15 months and recommends for me to balance transfers to save money. I was approved for the card and have a $2,000 card limit however I have a worse APR after the 15 months is done, its 22.99%. So this is my thinking and tell me if my thoughts are right... Should I transfer ALL of my Discover card to Chase or just half or so? Also once the 15 months are done should I change over to a new card or cancel my Chase card since its a higher APR? What do you all recommend in my situation?? Also I plan on trying to pay off my cards as much as I can in the next 15 months, so if I can somehow make it be a 0 balance is that good or a small balance is better?  I thought once I finish my balance I could close the cards but I hear that isn't good for my credit?

[bdhu2001]

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@Anonymous wrote:

Okay, I need help here. I'm kinda new to credit cards, so I don't know what affects my credit. However I have noticed ever since I got credit cards my credit rating has dropped. I used to have credit of about 700. Last month when I signed up for CK I had a 681 and now it says its 671. From what I been reading its probably because my cards are close to being maxed out. I used to think as long as I'm never late on my cards even if I paid the minimum it would help my credit but I've learned now I am wrong. I currently have two cards. A Discover card that has $2,000 limit and I only have 11 dollars available. I also have a Citi bank card where I have used up 772.00 of 1,000 available dollars. I'm already paying interest on both cards. On my discover card I have a 19.99% on my citi card Im not sure of my percentage but I believe its 19.99 also. CK recommended to me to get a Chase Slate card which has no APR for 15 months and recommends for me to balance transfers to save money. I was approved for the card and have a $2,000 card limit however I have a worse APR after the 15 months is done, its 22.99%. So this is my thinking and tell me if my thoughts are right... Should I transfer ALL of my Discover card to Chase or just half or so? Also once the 15 months are done should I change over to a new card or cancel my Chase card since its a higher APR? What do you all recommend in my situation?? Also I plan on trying to pay off my cards as much as I can in the next 15 months, so if I can somehow make it be a 0 balance is that good or a small balance is better?  I thought once I finish my balance I could close the cards but I hear that isn't good for my credit?

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Okay, I'm not the best person for advice on this, because I used to be the balance transfer Queen before I discovered utilization was on every single card and not just overall.   I need more information.  How much does the balance transfer cost you and how much can you comfortably pay in 15 months?  My motto is never do a balance transfer that you can't pay off, before the real rate hits and calculate the real cost of the transfer.  For instance they say things like 5% up front with a minimum of a $60 fee or etc. Also some companies tack on a monthly fee, $1.5 or $2, while you're paying off the transfer. Add the fees and the 5% up front to calculate the true interest rate.  

Thus the real interest in offer in the scenario above is approximately 6% for the first year.  It can be more if you transfer less and pay the minimum transfer fee.  Based on the interest rates you've listed on your cards, it can be a good deal for you if you put away your other cards and pay off the new card in 15 months. It's a better deal if you can also pay off the CitiBank card during those 15 months.  If you can answer "yes" to pay off $2890 within 15 months, then here's my suggestion:

Transfer 1800 to the new card from CitiBank.  Make minimum payments on new card until you pay off CitiBank (1st) and Discover(2nd).  Across all cards, you need to be paying a minimum of $207 + any new charges you put on your old card, each month.  Put the Discover and CiitiBank cards away and only use them for emergencies.  Once you've finished paying off CitiBank and Discover, take the amounts you previously paid to them and add it to the amount you're paying on your new card, until the new card is paid off. 

After all that is done, ask for a APR reduction on your new card and keep all cards below 20% utilization.  Before you do the transfer, you might also want to contact CitiBank and Discover to ask for an APR reduction.  Even if they give it to you, still follow the plan, but at least you'll be paying less interest while you pay them off.

[Anonymous]

Transfer fees are: $0 Intro fee on transfers made within 60 days of account opening. After that: Either $5 or 3% of the amount of each transfer, whichever is greater.

As far as how much I can pay I feel like I can pay the entire amount off.  I'm going to set aside 40-50 dollars a week from my paycheck every week to get rid of some of the debt.  Once my tax returns for 2015 comes I plan to finish paying off whatever balance I have left.  I didn't read anything on the fine print as far as monthly fees of 1.5 or 2.0 every month with balance transfers.

Maybe its just me not comprehending how credit cards fully work but you mention if I can pay off 2,890 dollars however what I owe is 1,989 to Discover and I owe Citi 772 so wouldnt that mean I owe a total of 2,761 or am I missing something that I am not aware of? 

In the suggestions you suggest I transfer 1,800 from Citi to the new card, Im assuming you mean transfer 1,800 from Discover?  Because Citibank I only owe 772. 

So at the end of the day if I transfer 1,800 from Discover to Chase I will end up with the following scenario:

I will have 1,800 with my Chase card that I have 0 APR for 15 months

I will have 198 owed left on Discover

I will still have 772 owed on my citi. 

Is the reason you say to pay Citi first because of the fact Im already paying interest on Citi at 19.99%?  Because originally my mindset was pay Chase card first despite its 0 APR because of the fact it will have a 90% utilization rate.  I thought from what I understand correctly pay off the cards with highest utilization percentage first?  Or will my credit be okay even with a 90% utilization at Chase and pay Citi first so I can save more money since im already paying APR on that card??

[bdhu2001]

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@Anonymous wrote:

Transfer fees are: $0 Intro fee on transfers made within 60 days of account opening. After that: Either $5 or 3% of the amount of each transfer, whichever is greater.

As far as how much I can pay I feel like I can pay the entire amount off.  I'm going to set aside 40-50 dollars a week from my paycheck every week to get rid of some of the debt.  Once my tax returns for 2015 comes I plan to finish paying off whatever balance I have left.  I didn't read anything on the fine print as far as monthly fees of 1.5 or 2.0 every month with balance transfers.

Maybe its just me not comprehending how credit cards fully work but you mention if I can pay off 2,890 dollars however what I owe is 1,989 to Discover and I owe Citi 772 so wouldnt that mean I owe a total of 2,761 or am I missing something that I am not aware of? 

In the suggestions you suggest I transfer 1,800 from Citi to the new card, Im assuming you mean transfer 1,800 from Discover?  Because Citibank I only owe 772. 

So at the end of the day if I transfer 1,800 from Discover to Chase I will end up with the following scenario:

I will have 1,800 with my Chase card that I have 0 APR for 15 months

I will have 198 owed left on Discover

I will still have 772 owed on my citi. 

Is the reason you say to pay Citi first because of the fact Im already paying interest on Citi at 19.99%?  Because originally my mindset was pay Chase card first despite its 0 APR because of the fact it will have a 90% utilization rate.  I thought from what I understand correctly pay off the cards with highest utilization percentage first?  Or will my credit be okay even with a 90% utilization at Chase and pay Citi first so I can save more money since im already paying APR on that card??

You're right, I meant Discover.  I apologize for the confusion. My concentration is on paying off your bills, saving interest, keeping it simple and increasing your FICO score.  Since we're moving or swamping the Discover balance, the FICO score will no longer continue to get worse.  The reason the figure was different, is because I calculated in a 5% fee plus 1.50 per month just in case.  

If your first priority is increase FICO, as quickly as possible, then save money & interest, then simplicity, the plan would be: Pay off CitiBank $772+accrued interest, pay $1178 to Discover. You get an immediate boost for paying a card completely off and your bringing down  your utilization without adding the balance of a third credit card. If you try to bring down all utilization to 60 or 50%, you'll end up with another high utilization card.

After the balance transfer, pay (max amount of budget) to Discover until you get it down to 600, then switch the max payment to your new card until it's 600.  Then pay off Discover and last pay off your 0% card.  When you get your tax returns, this becomes moot, but this (I believe) will give you your best FICO score while you're waiting for the additional funds.  After you pay off the cards, keep all cards except 1 at a zero balance and keep the other card at no more than 7%.  

You can swap around which card carries a balance to keep them all active (this is after they're all paid off), but only keep a balance on one card and that card below 7% to get your bestFICO score.

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[Anonymous]

Thanks so much.  As far as what my priority is I guess it depends on my current credit score.  671 is still considered to be a decent score right?  If so I guess maybe I want to save money more than anything.... so if thats the case I should do the following:

You originally said transfer 1,800 of my Discover card to Chase but in the latest post you said pay off 1,178 to Discover... so ideally of my 1,989 owed balance on my Discover card how much would you recommend I transfer to Chase?

Once I decide how much is transfered to Chase I should pay off both my cards that have APR's already so pay off my Citi card first then my small balance left over from my Discover card and then start paying off my Chase card which will have a high utlization % since most of my Discover balance will be transfered.  However despite having a high utilization would be smartest thing for me to do right since it will save me money? 

And like you said once I pay it all off then just keep one card out of a 0 balance?

[bdhu2001]

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@Anonymous wrote:

Thanks so much.  As far as what my priority is I guess it depends on my current credit score.  671 is still considered to be a decent score right?  If so I guess maybe I want to save money more than anything.... so if thats the case I should do the following:

You originally said transfer 1,800 of my Discover card to Chase but in the latest post you said pay off 1,178 to Discover... so ideally of my 1,989 owed balance on my Discover card how much would you recommend I transfer to Chase?

Once I decide how much is transfered to Chase I should pay off both my cards that have APR's already so pay off my Citi card first then my small balance left over from my Discover card and then start paying off my Chase card which will have a high utlization % since most of my Discover balance will be transfered.  However despite having a high utilization would be smartest thing for me to do right since it will save me money? 

And like you said once I pay it all off then just keep one card out of a 0 balance?

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Yes, exactly and keep the card with the balance below 7%.  I understand that if you have enough money to pay in full (PIF) each month, then you can allow the card to get up to 40-50%.  The problem with that is you have to pay attention to the difference between when you statement cuts and PIF about 4 days to a week before that.  Too complicated for me and I like to keep it simple.

[Anonymous]

Thanks so much for your help I understand everything now, one final question though would you still say transfer about 1,800 of the owed 1,989?? Or transfer less because in your second post you said pay 1,100 or so dollars to discover which if I transfer 1,800 I will only owe discover 189.00

[bdhu2001]

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@Anonymous wrote:
Thanks so much for your help I understand everything now, one final question though would you still say transfer about 1,800 of the owed 1,989?? Or transfer less because in your second post you said pay 1,100 or so dollars to discover which if I transfer 1,800 I will only owe discover 189.00

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If my priority is saving money, and there are no fees associated, I'd transfer the full balance with nothing to CitiBank other than what I would normally pay to both CIiti and Discover. But that's because I also like the simplest and cheapest plan, while increasing my FICO.

My first plan was based on expecting fees and the second was based on increasing FICO the fastest.  Since you're swapping balances, your FICO should get better as you pay off the CitiBank next and then the new card. Remember you can reduce the utilization on the Citibank quicker, because your larger payments are having a much greater impact on it's smaller balance. Thus, by month two (if not sooner) you should be seeing your FICO score gradually coming back up and be saving money at the same time. By the time CitiBank reaches $250, you should really see a nice jump from your current score.  Since you have the funds coming in, there is no reason to switch the higher payments to your 0% card for FICO utilization. Instead pay whatever is still owing on both cards when your funds arrive.

Please tell me I haven't confused you too much!