Balance Transfer Headaches and Possible Score Implications

[MrShush]

Ok, after reading these boards for months, I thought I had it all figured out--wrong. I wanted to simplify my life by consolidating a couple of credit cards. Right now I'm juggling 4-6 payments every month and I'm starting to get a little frustrated seeing no significant balance reductions. The balances I do carry are relatively small and manageable.

Yes, there is a point here.

I went on an app spree (mistake #1) to see what I could get in terms of limits and transfer offers and came away with a Citi Platinum Select MC with an $1800 limit and a rate of 18.99% (!!!) and a Chase Visa Select Southwest Rapid Rewards (preapproval letter every other week for months) with a $4000 limit, 13.74% and 0% for 6 months on transfers. I did call Citi to speak to a credit analyst and they would not budge. They pulled Experian (my worst) but still high 600's/ low 700's but there is a 6 year old $23 collection from BMG that is fraud and is 1 year away from SOL expiration. 

These are a bit disappointing but I guess it's better than nothing. I assumed I'd be offered higher limits considering recent activity: accepted preapproval for Sam's Club Discover ($4400), a Newegg card ($4000), a $2280 CLI on my Home Depot card ($7840 limit), and a $3500 CLI on FIA/Sovereign Bank MC.

The balances I have are: 

1. Discover: $372.00 -- $5490 limit
2. FIA/Sovereign MC: $2290.00 -- $7500 limit
3. FIA/BoA MC: $1000.00 -- $2500 limit
4. Home Depot: $1475.00 -- $7840 limit
5. Macy's: $73.00 -- $2500 limit
6. Bank line of credit: $1300.00 -- $2500 limit

I really wanted to roll the 2 MC balances into the transfer and pay it down a little more aggressively. The largest balance is at a rate of 15.99% and the Home Depot is mostly promo purchases that are payment and interest free for a good long while. My primary concerns/questions are: 1) should I BT the $3300.00 on the Chase Visa, will my scores get clobbered as a result of the high utilization and 2) if my score takes a hit, is it possible that I'll set in motion a nightmare of CLD's and account closures? My overall util. ratio is less than 20%.

Any ideas or suggestions or insight would be greatly appreciated!

Message Edited by MrShush on 07-02-2009 06:28 AM

[Cory]

I hear you, I'm working overtime to pay my penfed's credit card.

Cory

[Anonymous]

MrShush I think you didn't do so well on the cards you recently applied for is because you have ample amounts of credit available with decent balances on each. They may have been a bit nervous on issuing you more new credit when you have plenty already. BUT as they say.....you can never have too much.

The best way to do it is roll up a few of those card into one. Close a couple of account then apply again you'll get much different results higher limits and better rates. Banks don't like too see consumers with a smörgåsbord of different cards with balances on each....even if your scores are high you will still be turned down. Or be approved but with low limits.

King

Message Edited by 74king on 07-02-2009 10:20 AM

[haulingthescoreup]

OK, trying to boil this down here:

---

MrShush wrote...:

Citi Platinum Select MC with an $1800 limit and a rate of 18.99% (!!!)

Chase Visa Select Southwest Rapid Rewards $4000 limit, 13.74% and 0% for 6 months on transfers

The balances I have are: 

1. Discover: $372.00 -- $5490 limit
2. FIA/Sovereign MC: $2290.00 -- $7500 limit
3. FIA/BoA MC: $1000.00 -- $2500 limit
4. Home Depot: $1475.00 -- $7840 limit
5. Macy's: $73.00 -- $2500 limit
6. Bank line of credit: $1300.00 -- $2500 limit

 

Newegg card ($4000)

I really wanted to roll the 2 MC balances into the transfer and pay it down a little more aggressively. The largest balance is at a rate of 15.99% and the Home Depot is mostly promo purchases that are payment and interest free for a good long while. My primary concerns/questions are: 1) should I BT the $3300.00 on the Chase Visa, will my scores get clobbered as a result of the high utilization and 2) if my score takes a hit, is it possible that I'll set in motion a nightmare of CLD's and account closures? My overall util. ratio is less than 20%.

Any ideas or suggestions or insight would be greatly appreciated!

---

OK, so you want to move the Sovereign and BofA balances on to the new Chase card? So that would be $3290 plus the BT fee on a $4K CL that you would need to pay off in 6 months, or it's bend over and cough time. (Seriously!) That's $548.33/month. plus whatever the BT fee divided by 6 (months) is.Do you for-sure have this amount of free cash every single month for six months available for this payment? If so, great. If not, hmmmm....

Question: does the Newegg card show on your reports? I understand that it's a sleeper tradeline --it doesn't show on your reports. If so, you can't include its CL in calculating your util.

So, your current total CL is: 

  1,800

  4,000

  5,490

  7,500

  2,500

  7,840

  2,500

  2,500

 34,130     <--this does not include the Newegg account, because I don't think it reports

Your current total balance due is:

   372

2,290

1,000

1,475

     73

1,300

6,510

This puts your total util at $6,510 / $34,130, or19%. Before the new cards, it was 23%.

So, to address your original concerns: I don't think that one card (the Chase card with the BT's) would trigger AA. Ya never know, though. My guess is that your scores are currently being driven by total util, rather than by individual util.

Now as to whether it would be wise to BT over the two balances: when you're looking at that tempting 0% APR, remember that there is generally also a BT fee, frequently 3%, nowadays often 4%. Since you would have to pay off the BT within 6 months to keep the 0% BT APR, double those fees --that's the equivalent APR you would be paying for the transfer. So a 3% BT fee would be the equivalent of a 6% APR; a 4% BT fee would be the equivalent of 8%. And so on. That might still be better than what you're paying; I don't know. Just be aware that BT's aren't free.

I guess my greater concern is that you're going through all this agonizing for a relatively small balance of $6.5K or so. I'm sure it feels like a fortune to you (been there, done that, got the t-shirt), but I'm kind of worrying that you're maybe spending a lot of mental energy on robbing Peter to pay Paul --moving debt from Point A to Point B --rather than just paying the debt off.

At this point, your total credit limits are fine. Don't put any more energy into increasing your current CL's or getting new cards to try to game the system. Right now, it's all about paying down the balances. So if you are OK with the BT fee ding from moving over the two MC balances, and if you can pay off those combined balances in six months <--this is huge; that's why I emphasized it, then go for it with the cast-in-concrete plan of having it completely gone in six months, and then going after the rest. 

Otherwise, choose one of the following: pay off the smallest balance first, and then add the money you were paying on that to the next-smallest balance, paying it off, and so forth (snowballing) OR pay off the highest APR account first, and then the next-highest, and so forth. The first can be psychologically motivating; the second makes more financial sense.

Either way, start throwing a lot of money at the balances, and that will be what digs you out.  hth

--holy cow, what did you format this in??? I tried to edit it in html and nearly lost my mind...

[Anonymous]

---

@haulingthescoreup wrote:
OK, trying to boil this down here:

OK, so you want to move the Sovereign and BofA balances on to the new Chase card? So that would be $3290 plus the BT fee on a $4K CL that you would need to pay off in 6 months, or it's bend over and cough time. (Seriously!) That's $548.33/month. plus whatever the BT fee divided by 6 (months) is.Do you for-sure have this amount of free cash every single month for six months available for this payment? If so, great. If not, hmmmm....

---

---

This is very true And in detail too.

King

Message Edited by 74king on 07-02-2009 06:29 PM

[MrShush]

You are correct, the Newegg doesn't report and neither does my old Radio Shack with it's $200 limit. Also, in calculating the total utilization, you forgot the $4400 Sam's Club Discover and I omitted a Zales card with a $550 limit which when included, further lowers my overall util. That's irrelevant at this point. 

I paid down a good 4K with this years tax refund (first time homebuyer credit FTW!!!) and I really want to get rid of my current debt. My income, while it hasn't been changed, I'm missing the bonus dollars of last year (overtime, raises, bonuses, etc.). I shouldn't have counted that, but I became accustomed to it.

I know, unless I change jobs, I won't be able to pay $550 a month towards the BT in time to take advantage of the 0%. I will be able to make a small dent in the debt but to pay it off in such a short period is unrealistic at this point barring some windfall or career change. 

I usually paid my smallest first for the psychological gratification of ZERO's; this time I may go the other way.

[MrShush]

Update in case anyone is interested...

PIF Bank of America $1000 (07/11)

PIF Macy's $73 (by 07/31)

PIF Chase $39 ( 07/11...stupid AF)

PIF Discover $375 (by 07/31)

That'll leave me more cash to pay down the Sovereign Bank MC and Home Depot. I don't think I'll be closing the others but having fewer payments to manage will make my life easier.

[Karatz]

---

@MrShush wrote:

Update in case anyone is interested...

PIF Bank of America $1000 (07/11)

PIF Macy's $73 (by 07/31)

PIF Chase $39 ( 07/11...stupid AF)

PIF Discover $375 (by 07/31)

That'll leave me more cash to pay down the Sovereign Bank MC and Home Depot. I don't think I'll be closing the others but having fewer payments to manage will make my life easier.

---

I see a lot of questions, need help etc, and it's rare to see someone follow up months laters as to what happened since. Thanks