topic Re: Balance Transfer - Good or Bad Idea? in Understanding FICO® Scoring

Balance Transfer - Good or Bad Idea?

PCR20 — Mon, 28 Nov 2011 05:23:23 GMT

I'm working on paying off a Citi card that is charging me 25% on a $9,000.00 balance.

Juniper is offering me $5,000.00 at 3.99% on balance transfer with a $100.00 fee cap on a card I already have $0 balance on.

This would put the Juniper card at it's limit, but drop my Citi card to less than 30% and lower the monthly interest.

It seems like a good idea, but somewhere I read that scores are rated on a per-account utilization basis, not my overall Balance-to-Available Credit.

If it matters, my current score (Experian Triple Advantage) is 766

Re: Balance Transfer - Good or Bad Idea?

Odiseous — Mon, 28 Nov 2011 06:23:36 GMT

@TCarson wrote:
I'm working on paying off a Citi card that is charging me 25% on a $9,000.00 balance.

Juniper is offering me $5,000.00 at 3.99% on balance transfer with a $100.00 fee cap on a card I already have $0 balance on.

This would put the Juniper card at it's limit, but drop my Citi card to less than 30% and lower the monthly interest.
It seems like a good idea, but somewhere I read that scores are rated on a per-account utilization basis, not my overall Balance-to-Available Credit.

If it matters, my current score (Experian Triple Advantage) is 766

As I understand it: Both individual, as well as overall.

Correct me, if my math is wrong.

$9000 (debt)

-5000 (transfer)

-------

=4000 (balance on Citi)

If $4000 is approximately 30% of the Util on the Citi, that's be an approximate $13k-$15k CL.

To me; it sounds more like you need to worry more about getting get your debt paid down; than about the immediate impact of your scores (until you get the Util down).

Unless you have some other mitigating factors, the 3.99 sounds a lot better than 25%. You can then apply the savings you'd have paid in interest toward the rest of the high interest balance.

Note: This is assuming you don't rack up more debt.

Re: Balance Transfer - Good or Bad Idea?

pizzadude — Tue, 29 Nov 2011 18:36:08 GMT

Anything you can do to get out from under that 25% CC would be beneficial. Even if your scores were to take a hit from having two cards with balances, I would do it, you are probably paying at least $150 in interest every month, right ??

Re: Balance Transfer - Good or Bad Idea?

PCR20 — Wed, 30 Nov 2011 06:55:38 GMT

Well, I had just got through paying 2,500 to it to lower the balance from 11,500 where I was paying $240 in interest, so I don't know yet what the new interest payment would have been.

I went ahead and did the balance transfer and will add another 1500 to the payment on friday, so next month it will be at 2,500

In two more months it will be zero and Citi will not be seeing any more interest from me.

(I won't close it, just never use it again)

This card used to be my best Mileage card (AmericanAir), but one month I missed the payment by 1 day and the interest went from somewhere around 8% up to 25%!

I guess that's what I get for staying one extra week on vacation and not thinking about my bills until we got home

On a side note: I just now looked at the balance to see if my transfer went through yet and notice that any new purchases would be at 29.49% !!!

I hope Citi and Chase both get what they well deserve...the same fate as AIG.

Re: Balance Transfer - Good or Bad Idea?

pizzadude — Wed, 30 Nov 2011 15:20:05 GMT

Good job on starting to pay it down !!! I have carried large balances too, and I know how hard it is to make progress against high interest rates like that.

Sorry that they ratejacked you like that. Did you try calling them and asking them to cut you some slack ? Sometimes they will do that if you haven't been late often or if you catch them on a good day.

Re: Balance Transfer - Good or Bad Idea?

bichonmom — Thu, 01 Dec 2011 03:39:35 GMT

@TCarson wrote:
Well, I had just got through paying 2,500 to it to lower the balance from 11,500 where I was paying $240 in interest, so I don't know yet what the new interest payment would have been.

I went ahead and did the balance transfer and will add another 1500 to the payment on friday, so next month it will be at 2,500
In two more months it will be zero and Citi will not be seeing any more interest from me.
(I won't close it, just never use it again)

This card used to be my best Mileage card (AmericanAir), but one month I missed the payment by 1 day and the interest went from somewhere around 8% up to 25%!
I guess that's what I get for staying one extra week on vacation and not thinking about my bills until we got home

On a side note: I just now looked at the balance to see if my transfer went through yet and notice that any new purchases would be at 29.49% !!!

I hope Citi and Chase both get what they well deserve...the same fate as AIG.

Wow! That is really unfair. I am *so* terrified of doing that myself. I've done it with other non-CC bills -- just slipped my mind with so much going on in my life and work.

Have you tried talking w/a supervisor/credit analyst (in other words, higher up than a regular CS rep) re lowering your rate given the circumstances. Sometimes you'll get through to someone who will realize the situation and give you a one-time adjustment. You might also try to see if Juniper (which I believe is Barclay's, isn't it?) will give you a CLI so you can BT the whole thing?

At least you've partially gotten out from under that insane 25% rate. Personal opinion: I think that should be illegal. Really.

Re: Balance Transfer - Good or Bad Idea?

pizzadude — Thu, 01 Dec 2011 20:59:37 GMT

----> any new purchases would be at 29.49% !!!

I feel your pain, one of my CCs has a 29.99% rate, which they refuse to lower. So I refuse to use it.

Re: Balance Transfer - Good or Bad Idea?

PCR20 — Sun, 04 Dec 2011 19:36:15 GMT

@bichonmom wrote:
Wow! That is really unfair. I am *so* terrified of doing that myself. I've done it with other non-CC bills -- just slipped my mind with so much going on in my life and work.

Have you tried talking w/a supervisor/credit analyst (in other words, higher up than a regular CS rep) re lowering your rate given the circumstances. Sometimes you'll get through to someone who will realize the situation and give you a one-time adjustment. You might also try to see if Juniper (which I believe is Barclay's, isn't it?) will give you a CLI so you can BT the whole thing?

At least you've partially gotten out from under that insane 25% rate. Personal opinion: I think that should be illegal. Really.

I thought about contacting them about this, then decided to just pay it off and put it in the safe.

25% vs 8% isn't much difference if I pay it off in two months, and the ultra high interest keeps me focused on getting rid of it NOW!.

25% of $0 is $0 and that's what they are going to get from me going forward.

As for it should be illegal, I agree.

When a "non-bank" charges that much interest on a personal loan, it is illegal... it's called Loan Sharking.

I think the same rules should apply (i.e. Jail Time) and refunds should be given to those that have been scammed by these large banks that the US public keeps bailing out.

Will this ever happen?, only in my dreams.

As it sits right now, the balance went from $11K last month to $2,400 right now.

The ChristmasTree will be less a few boxes under it, but the people around it will be in much better spirits.

Re: Balance Transfer - Good or Bad Idea?

Anonymous — Mon, 05 Dec 2011 03:26:38 GMT

thats insane,,, i would shrread that card

Re: Balance Transfer - Good or Bad Idea?

RobertEG — Mon, 05 Dec 2011 06:29:19 GMT

My math says CITI now approx 60%, Juniper now 0%

With the BT, CITI would be at 30%, and Juniper at approx 100%

I would venture to say that the individ card util at near 100% on the Juniper would result in more individ card % util damage than

would be gained by the reduction from 60% to 30% on the CITI.

Why?

I am presuming that % util is scored on more of an exponential rather than linear scale as high utils are reached. In English, that means that each 10% increase at the higher util levels hurts more than the same 10% increase/decrease at lower util levels. If that assumption is true, and I think it is, the high util on the Juniper would, in my opinion, produce an overall pt loss.

It is very iffy. Add to that the fact that it will cost you $100 for the pleasure of finding out, and it is not a FICO gamble I would expect to win.

However, if you are doing it for financial reasons only, then the math is simple. You save $.

Re: Balance Transfer - Good or Bad Idea?

PCR20 — Mon, 05 Dec 2011 08:40:08 GMT

@RobertEG wrote:
...I am presuming that % util is scored on more of an exponential rather than linear scale as high utils are reached. In English, that means that each 10% increase at the higher util levels hurts more than the same 10% increase/decrease at lower util levels. If that assumption is true, and I think it is, the high util on the Juniper would, in my opinion, produce an overall pt loss.

That is my assumption also, but I figured that a month ago, the Citi Card balance was at 11.5K on a 13K limit and my Experian was at 766, so maybe it will balance out.

In another month, the Citi will be at zero, so that should help.

I know the Experian is a fako, but still, it was rated in their highest grouping.

It will be interesting to see what Experian says in a few weeks when this all takes effect.

I can run my Experian for free as much as I want, thanks to CountryWide posting my information all over the net...

My plan is to purchase a motor home this fall, and by then I will pay off all of my cards and my car loan.

I have a perfect payment record with 25+ years of credit on it, so I'm looking to push my real FICO's as high as possible and get the best interest available.
I'll pull them in a month or so to see where I'm really at.

Re: Balance Transfer - Good or Bad Idea?

CreditAble — Mon, 05 Dec 2011 19:40:05 GMT

@TCarson wrote:
@bichonmom wrote:
Wow! That is really unfair. I am *so* terrified of doing that myself. I've done it with other non-CC bills -- just slipped my mind with so much going on in my life and work.

Have you tried talking w/a supervisor/credit analyst (in other words, higher up than a regular CS rep) re lowering your rate given the circumstances. Sometimes you'll get through to someone who will realize the situation and give you a one-time adjustment. You might also try to see if Juniper (which I believe is Barclay's, isn't it?) will give you a CLI so you can BT the whole thing?

At least you've partially gotten out from under that insane 25% rate. Personal opinion: I think that should be illegal. Really.

I thought about contacting them about this, then decided to just pay it off and put it in the safe.
25% vs 8% isn't much difference if I pay it off in two months, and the ultra high interest keeps me focused on getting rid of it NOW!.
25% of $0 is $0 and that's what they are going to get from me going forward.

As for it should be illegal, I agree.
When a "non-bank" charges that much interest on a personal loan, it is illegal... it's called Loan Sharking.
I think the same rules should apply (i.e. Jail Time) and refunds should be given to those that have been scammed by these large banks that the US public keeps bailing out.
Will this ever happen?, only in my dreams.

As it sits right now, the balance went from $11K last month to $2,400 right now.
The ChristmasTree will be less a few boxes under it, but the people around it will be in much better spirits.

Actually the reason banks now refuse to lower rates is because the politicians made laws to keep the banks from rauising rates on existing balances. Be careful what you ask for. You might get it. If more laws are enacted, the interest rates will only go up for the people who can least afford it.

As far as what is illegal and what is not. Some "non banks" (ie. pawn shops) charge as much as 25% PER MONTH. That is a rate of over 300%/year. Most government capped interest rates ceased years ago. The last I remembered was Arkansas having a cap on interest rates. It was called an anti "usury" law. That is why Arkansas (ie Simmons First) issued credit cards had some of the lowest interest rates. Of course someone without a great credit score couldn't get approved for credit at all. Most of the investable capital posessed by Arkansans was simply invested in other states. I don't what the state's current usury laws are like.

South Dakota and Maryland became banking meccas because of the higher allowable interest rates.

If the government enacts more "reforms" it will only enable the banks to grab more money by again raising rates and adding more (& higher) fees. The banks justify thier latest revenue grabs by blaming the latest round of government (new) rules, regulations and laws.

The best defense is as you pointed out, is to keep debt as low as possible. No matter what the government does; the borrower will still always be slave to the lender.

Re: Balance Transfer - Good or Bad Idea?

PCR20 — Mon, 05 Dec 2011 20:53:58 GMT

@CreditAble wrote:
....
Actually the reason banks now refuse to lower rates is because the politicians made laws to keep the banks from rauising rates on existing balances. Be careful what you ask for. You might get it. If more laws are enacted, the interest rates will only go up for the people who can least afford it.
...

Well explained, Thank You.

My problem with all of this, with the banks not lowering interest to anyone, is it has a negative effect on the entire US economy.

People like me, that get hit with these insane rates are going to hold off on big ticket item purchases until we can pay them off in full.

Maybe not for a Motor Home, but definitely with things like travel, home appliances, home improvements, cars and such. I can well afford to make payments, but not to throw away 25% of my funds.

I will still make the purchases, but it will be in a year or two instead of now and I will pay them in full.

I'm not necessarily saying this is a bad thing, (not buying on credit), just that it will slow down the recovery of the economy.

Re: Balance Transfer - Good or Bad Idea?

CreditAble — Tue, 06 Dec 2011 04:47:23 GMT

@TCarson wrote:
@CreditAble wrote:
....
Actually the reason banks now refuse to lower rates is because the politicians made laws to keep the banks from raising rates on existing balances. Be careful what you ask for. You might get it. If more laws are enacted, the interest rates will only go up for the people who can least afford it.
...
Well explained, Thank You.

My problem with all of this, with the banks not lowering interest to anyone, is it has a negative effect on the entire US economy.

People like me, that get hit with these insane rates are going to hold off on big ticket item purchases until we can pay them off in full.

Maybe not for a Motor Home, but definitely with things like travel, home appliances, home improvements, cars and such. I can well afford to make payments, but not to throw away 25% of my funds.
I will still make the purchases, but it will be in a year or two instead of now and I will pay them in full.

I'm not necessarily saying this is a bad thing, (not buying on credit), just that it will slow down the recovery of the economy.

Without a doubt the higher credit card interest will slow down any recovery. Big ticket items will get cheaper over the next few years. Food prices will go through the roof. Best strategy is to save money and buy for cash. I believe that credit card low (no) interest promos will pop up more and more. The "go to" rate after pomotional rates expire will continue to rise. Buying the big ticket items on credit might be affordable if one can be sure to pay off loans before promo periods expire.

BTW, the motor home (installment loan) interest rates might actually become more affordable as demand for motor home loans slows down. Furthermore as people"s discretionary cash continues to vaporize, non essentials like motor homes are definitely coming down in price in order to attract buyers. The longer you can put off buying the motor home, the more money you can save toward its purchase. The longer you wait the lower the price will be. Cash will absolutely be king for the next few years.