Balance Transfer Question

[Anonymous]

Aloha everyone and I hope you all are having a nice holiday season!

My DS is going to be helping her husband's parents after the 1st of the year due to a health issue that has put his parents in a tough spot temporarily. My DS has around $110K in CL's (10 accounts total) and owes <$100 across all cards. She will be doing BT's totaling somewhere between $14K-$18K. So guru's, she wants to know if it's better to BT all to one of her cards or should she split it up between 3-4 cards? If she uses one card, she will use about 75-85% of that cards CL. She is wondering if all on one is better for her scores than 3-4 cards with significant balances?  DS anticipates paying off the total amount within 12 months and normally wouldn't worry about her scores but she will be doing a refi in the spring and of course wants to minimize the score drop.

I sure didn't want to weigh in because this is wayyy above my knowledge base. Thank you all for your help; it is (as always) very much appreciated!

[AllZero]

@Anonymous  Can you advise the following:

Is the refi for home or auto?

What month in spring for refi?

What cards does DS plans to use and credit limits?

Do these card(s) charge BT fees?

[Anonymous]

Not sure she can BT someone else's balances to her cards. From countless apps, it only asks for account numbers and amounts when initiating BT. Does this mean: 

1.) It's assuming your first/last name is on the account, and will only complete if a match, or 

2.) It doesn't care which name is on the account being paid off, and will complete regardless. 

Could anyone clear this up? Thanks! 

[tcbofade]

As long as the account number is valid, the balance transfer will go through.

Name on account is irrelevant.

OP, if possible, DS will want to keep her individual utilization under 28%.  It's better to have smaller balances spread across a few cards then to have one card maxed out.

Good luck!

[Anonymous]

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@AllZero wrote:

@Anonymous  Can you advise the following:

Is the refi for home or auto?

What month in spring for refi?

What cards does DS plans to use and credit limits?

Do these card(s) charge BT fees?

@AllZero  thank you for the response; you are always so helpful. House refi possibly in late May/June if her husband signs a new 3 year contract at work. She said that if she carried $20K (worst case) in balances, her total DTI before the refi would be <23%. She will most likely use her NFCU Flagship card ($25K CL) and she could split it with her Navy Platinum ($20K CL) and a new Discover ($15K CL) if that would be best. No BT fees at Navy of course and she is anticipating minimal interest at Navy in January. BT fee of 3% at Disco but she can still use her 14 month at 0% offer there. DS is under the impression that it would look better to just carry one balance but that's why she asked me to check in case that wasn't accurate. I know she gets a lot of peace of mind from those zero balances! Additionally, she will be paying $1K a month on the outstanding balance and then pay off anything that remains before the end of the year.

@Anonymous yeah, there isn't a problem with the accounts not being in her name. She has done it before for smaller amounts without a problem. Perhaps it's FI specific but it wasn't an issue at Navy, DCU or Disco for her in the past.

@tcbofade thank you for weighing in. She will have the total debt reduced by $4-5K by the time she needs to have her scores at their best. I know there is a hit for having balances on too many cards so even though she will take a hit, I think she wants to minimize the damage in the beginning as much as possible.

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[AllZero]

Short Answer -  Perhaps use the NFCU Flagship and Platinum cards for BT.

Long Answer:

For EX2 she can get away with 2/10 cards reporting balance. Once she hits 3/10=30% of cards reporting a balance, will be a threshold, score penalty. I presume the same for TU4 and EQ5 if it follows the older scoring algorithm.

I'm not sure of the score penalty once individual account reaches 75%-85% utilization. There will be one. That's why it might be better to split the difference using 2 BT accounts.

Working backwards, DS will want to be optimized as best as possible by late May.

Using this as a thresholds guideline:

Aggregate 9%, 29%, etc.

Individual 9%, 29%, 49%, etc.

If we presume $20K BT, example below. If BT is done in January. $1,000 payment per month, $4,000 payments done by May.

11,000/25,000 = 44% Flagship January
9,000/25,000 = 36% Flagship May

9,000/20,000 = 45% Platinum January
7,000/20,000 = 35% Platinum May

Aggregate
20,000/110,000 = 18% January
16,000/110,000 = 15% May

DS utilization will fall within the above mentioned guidelines. Once DS can cross thresholds will yield more points; e.g. 9% aggregate and 29% individual utilization.

[Anonymous]

@AllZero Mahalo for all the work you put into this my friend! It looks like using the two Navy cards is my DS's best bet. That way if she decides to put extra cash toward each balance the month before the refi she should be able to get below 29%. 

I will report back to this thread for the purpose of DP's to see how much of a drop she sees initially and how quickly she rebuilds her scores.

Thank you again AZ!! This is a huge help! 💚