topic Re: Balance transfer to lowest APR credit card in Credit Cards

Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 15:10:39 GMT

Hi friends!

I've learned so much on these boards and cannot thank you all enough for the help and support I've gained! I've finally taken control over my credit and I'm working to repair the damage my younger, dumber self did. I'm currently looking at almost $13k in cc debt spread out over 4 cards and paying it off is my top priority.

I've been using the "snowball" technique to pay off the lowest balance first, and it has been incredibly satisfying; so far I've managed to pay down to zero balances on two store cards and a Cap One card. My question is this; now that I have some momentum going, would it be better to pay down the balance on the card with the lowest interest rate (a NFCU card) and then transfer the balance from my highest card (a Discover card)? I'm trying to make my money work as hard as I can.

Some additional info:

My goal is to buy a house in a year, so I'm more concerned about my DTI than my credit utilization at the moment, as I know utilization is a snapshot that doesn't *really* matter for the moment as I'm not applying for any new credit right now, just trying to pay down debts as quickly as possible.

4 cards with balances - my APRs are high as I've been terrible about my credit until about a year ago.
NFCU - $5270 at 18.00%
Chase - $1830 at 23.74%

Discover - $1214 at 24.49%

Cap One QS1 - $4589 at 24.49%

Thanks in advance for your help!

Re: Balance transfer to lowest APR credit card

K-in-Boston — Thu, 10 May 2018 15:14:28 GMT

Congrats on your hard work! What are the limits on each card? Which ones have balance transfer offers, and what are the terms (i.e. 0% for 12 months with 3% balance transfer fee)? Depending on how you can shuffle balances around, it may make better financial sense to empty out one or two cards that will then allow you to move all of the balances over. Not only does that reduce the amount of interest you'll pay on the balances, but it will also allow you to pay them down (or off) faster with the same payments you're currently making.

Re: Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 15:31:27 GMT

Thanks for the encouragement!

My balance/limits are:

NFCU: $5270/$5500 (18%)

Chase: $1830/$2000 (23.74%)

Discover: $1214/$2000 (24.49%)

Cap One QS1: $4589/$5000 (24.49%)

My old plan has my paying down the Discover card because it has the lowest balance (and the highest interest rate). I'm hoping that if I can pay the NFCU down to zero I can get a balance transfer offer. The only current balance transfer offer I have is from Capital One; I have two cc from them and after I paid off the Cap One Platinum MC ($900 limit) they offered me a (cruddy) bt offer of no balance transfer fee but at my current rate for purchases, 26.4% which is higher than any of my other cards.

Just kind of wondering if I should switch tack and pay down the NFCU card rather than the Discover card and then request a balance transfer offer?

Re: Balance transfer to lowest APR credit card

nicholasyud — Thu, 10 May 2018 17:43:46 GMT

once u paid down your balance....called them and ask for lower APR.......Those credit card company so stink that they only lower your APR when u doesnt carry balance............but if u carry some kind of balance....they never ever going to low it......Look like u on the right track ...Keep it up.....

Re: Balance transfer to lowest APR credit card

K-in-Boston — Thu, 10 May 2018 18:02:49 GMT

@Anonymous wrote:
Thanks for the encouragement!
My balance/limits are:
NFCU: $5270/$5500 (18%)
Chase: $1830/$2000 (23.74%)
Discover: $1214/$2000 (24.49%)
Cap One QS1: $4589/$5000 (24.49%)

My old plan has my paying down the Discover card because it has the lowest balance (and the highest interest rate). I'm hoping that if I can pay the NFCU down to zero I can get a balance transfer offer. The only current balance transfer offer I have is from Capital One; I have two cc from them and after I paid off the Cap One Platinum MC ($900 limit) they offered me a (cruddy) bt offer of no balance transfer fee but at my current rate for purchases, 26.4% which is higher than any of my other cards.

Just kind of wondering if I should switch tack and pay down the NFCU card rather than the Discover card and then request a balance transfer offer?

Hmmm, usually Discover is really good about offering constant balance transfer offers. Those other 3 cards have extremely high utilization which is likely killing your scores. The 61% utilization on the Discover is hurting, but it's nowhere near as harmful. If at all possible, I'd try to get the NFCU card below $4895, the Chase below $1780, and the CapOne below $4450 ASAP (keep in mind that would be the reported balance when your statement closes including interest accrued during that statement cycle; you could likely estimate that by seeing how much interest you were charged on the previous statement). Generally, having any revolving credit cards at or above 90% is a sign of financial difficulty and will wreak havoc on credit scores. If you're able to do that, I'd wait until the new lower balances appear on your credit reports and then ask both Discover and CapOne for a credit line increase (both should be soft pulls with no harm if denied) to give you a little more breathing room.

If you were able to pay down the NFCU card, how long do you estimate that it would take you? The NFCU offers don't usually come around constantly so even after paying it off, you may have to wait a while before one appears. On the other hand, that balance isn't far off from the combined balances of the CapOne and Discover cards. Discover is generally known for granting good CLIs after a large balance is paid in full, and again BT offers are usually readily available. (You may not be seeing them due to the significantly high utilization on your other cards.) If it were me, I'd get the 3 cards down under 90%, ask for CLIs regularly on those 2 cards that shouldn't be hard pulls, and work on paying off the Discover and CapOne cards, which would hopefully open up space to get the lower APR cards moved to 0%, 3% or 4.9%.

Re: Balance transfer to lowest APR credit card

Appleman — Thu, 10 May 2018 18:26:35 GMT

I agree with K on getting all utilization below 90%. Personally I would continue to get below 70% on all cards before proceeding with anything.

Do you currently use a budget? If so I strongly advise you invest the time in getting and using a budget. This will be even more helpful once you get into a house as there are so many expenses that come up.

You may want to see if you qualify for a personal loan on sites such as Prosper or SoFi.com. These sites offer a chance for you to see if you pre-qualify with only a SP (HP if you fully apply). Personal loan debt will have less of a negative effect on you scores as compared to the same amount of credit card debt. The big issue is not running up the cards again.

Re: Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 18:48:07 GMT

I have about $520 a month to put towards paying down actual debt (this is in addition to making the minimum payments for my existing accounts [NFCU: $115, Discover: $59, Capital One: $147, and Chase: $60]). So I could get my accounts below your recommended amounts in 2 months (by June 2018).

In August my car will be paid off so I'll have an additional $300 a month to put towards paying down my cc balances.

If I'm understanding you, once the new lower utilizations are reported I may have some room to negotiate lower APRs on at least the NFCU cc?

Re: Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 19:15:49 GMT

Thanks, Appleman! I currently use YNAB and it's really been crucial in getting my financial house back in order. I recommend it to everyone!

Re: Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 18:58:32 GMT

I would keep it simple and keep snowballing. Your biggest balance is your lowest rate card and the interest you pay on the others isn't all that different.

I'd add a year of hardcore saving inbetween paying these off and buying a house. Don't want to have to rely on your credit cards when the water heater croaks.

Re: Balance transfer to lowest APR credit card

Anonymous — Thu, 10 May 2018 19:22:41 GMT

This is the advice I *need* but never want to hear, SteelerNYC! I feel like these interest payments are killing my earnings (feels like water running through a sieve!) and savings have really taken a backseat to putting out these fires. I know I'm likely 2 years away from home ownership but feel like it's the big juicy carrot I need to keep working towards the goal.

Re: Balance transfer to lowest APR credit card

Kforce — Fri, 11 May 2018 01:25:37 GMT

If you stick to the 520, then add 300 when you say you can. This will be paid off in 22 months. Work hard, add any extra you can and don't use any of the cards. High interest first only save 1 month so snowball, HI, or attack each for better overall util are all about the same time frame.

You can have <1 Util in less than 2 yr.

Re: Balance transfer to lowest APR credit card

SouthJamaica — Fri, 11 May 2018 02:06:23 GMT

@Anonymous wrote:
Hi friends!

I've learned so much on these boards and cannot thank you all enough for the help and support I've gained! I've finally taken control over my credit and I'm working to repair the damage my younger, dumber self did. I'm currently looking at almost $13k in cc debt spread out over 4 cards and paying it off is my top priority.

I've been using the "snowball" technique to pay off the lowest balance first, and it has been incredibly satisfying; so far I've managed to pay down to zero balances on two store cards and a Cap One card. My question is this; now that I have some momentum going, would it be better to pay down the balance on the card with the lowest interest rate (a NFCU card) and then transfer the balance from my highest card (a Discover card)? I'm trying to make my money work as hard as I can.

Some additional info:
My goal is to buy a house in a year, so I'm more concerned about my DTI than my credit utilization at the moment, as I know utilization is a snapshot that doesn't *really* matter for the moment as I'm not applying for any new credit right now, just trying to pay down debts as quickly as possible.
4 cards with balances - my APRs are high as I've been terrible about my credit until about a year ago.
NFCU - $5270 at 18.00%
Chase - $1830 at 23.74%
Discover - $1214 at 24.49%
Cap One QS1 - $4589 at 24.49%

Thanks in advance for your help!

Under the snowball method you should be paying off the Discover card now. So do it.

Re: Balance transfer to lowest APR credit card

Anonymous — Fri, 11 May 2018 14:43:54 GMT

@Anonymous wrote:
This is the advice I *need* but never want to hear, SteelerNYC! I feel like these interest payments are killing my earnings (feels like water running through a sieve!) and savings have really taken a backseat to putting out these fires. I know I'm likely 2 years away from home ownership but feel like it's the big juicy carrot I need to keep working towards the goal.

Just hang in there. You're well on your way already and having that car payment freed up soon will really send you into the fast lane