Balance transfer advice please

[Anonymous]

I am super excited to have been approved on RECON for a Premium Travel Rewards American Express from Penfed! I am rebuilding, and a large roadblock to raising my score has been utiliazation. Utilization is high due to relatively low credit lines. All in all I can pay off all CC's within about 4-5 months, but I'm looking to save interest in the short term, and improve my utilization, while building my relationship with Penfed.

The Amex will have a limit of $5k, and will have 0% for all balance transfers for 12 months, then reg APR of 13.24% So I need help determining how I should allocate balance transfers. I do not want to exceed 30% utilization on the AMEX, so I'm wondering if I should transfer my highest balance and pay all others down to 30% in time, eventually paying all off.. or spread balance transfers out to get most lines down to 30%.

*I have applied for CLI's with these creditors, and many turned me down due to utilization. I know what is below is not great... I came onto some rough times with my wife getting diagnosed with Leukemia and it caused us to use credit while utilizing cash to pay medical expenses/ bills/ Rent. We are on the other side now- She is in remission, and those medical expenses are paid in full. I have a much better income now as well.. so looking for some help on what to do here. Please don't beat me lol.

Budget to pay off is 1k - $1500/ Month. The ultimate goal is to have no balances and to pay in full on new charges.
 

My current balances / APR's are as follows (In order of APR)

Card 1 (America's Tire store card): $400 credit line/ $361.40 balance @ 26.99%

Card 2 (Amazon Prime store card): $700 credit line/ $331.10 balance @ 26.24% ($300 of this balance is at 0% until march 2017)

Card 3 (Kohl's MVC Store Card): $700 credit line/ $425.31 balance @ 24.24% 

Card 4 (Firestone Store Card): $1200 Credit line/ $954.88 balance @22.80%

Card 5 (Capital One Quicksilver One): $700 Credit line/ $554.54 balance @ 20.15%

Card 6 (Capital One Quicksilver One): $1750 Credit Line/ $1600.00 balance @ 18.15% (Hoping to combine the $700 Quicksilver credit line to this card once it's paid in full. Good Idea?)

Card 7 (Toyota rewards store card): $1000 Credit Line/ $900 balance @ 0% until 6/2017

Big kudos to Penfed to giving me the opportunity to do this, and halping me with my goals. Loving them so far!

Thanks for your help everyone.

[austinguy907]

Cograts on the Approval!  Congrats on the Leukemia hopefully in remission.....

W/O knowing the PF limit it's hard to say, but, maybe consider a personal loan and lump them all into one lower payment?  Once you lump them into a loan and give them 30-45 days to report $0/0% they'll boost your scores and finally leverage some CLI's on them with the score jump you'll see.  Obviously rebuilding looking at the APR's here and the lower limits.  The key to this is going to be just paying them down.... making min payments suck but, if you can make all the min's on them and then hammer out a full balance on at least 1 each month until you get to the higher balances which might be harder to tackle in a single payment.  Once things are paid off then they'll grow but, you have to resist apping for new stuff for that to work in addition to the reduced utilization.

PF might offer a personal loan with the same pull they used to approve the card.  

[Anonymous]

The Amex limit will be 5k. Added it into my post also - thanks for pointing that out. 

[austinguy907]

5K isn't much to work with if you're looking at scoring some points on your scores.  So, you have 7 accounts with balances listed and avg payment say $35 ($250/mo).

What's your budget for paying things down?  Say it's $500/mo.... If you make all of the min payments and put the remainder $250/mo on the highest APR it would be paid off pretty quick.  Then next month do the same thing with the next one.  I would concentrate on the balances you can kill each month with the additional payment budget and then work to the higher balances from there.  

Another option would be moving the 2 highest balances to the PF card since those would be accumulating the most interest by $ amount even with the lower APR than card #1. and keep killing off the lower balances each month with the surplus amount.

Once all of the small balances get killed off you should be debt free if you continue to put the $500/mo towards the 0% PF card within say 6 months or so.

[Anonymous]

My budget is at least $500/ month but will be up to $1000 some months.

So for example put these balances to the AMEX:
$954.88 balance @22.80%
$1600.00 balance @ 18.15%

And kill one of each of the others every month ? Only issue is that puts the Amex over 30% util. I thought of only bringing the $1600 over and working on the other balances as-is which will put me at about 35%. Am I overthinking the utilization?

[austinguy907]

The ultimate goal is to be at the point of being able to PIF each month and keep those balances tamed from now on.  30%+ on PF is better than 2 cards at 90% for scoring purposes.  Since the bulk of your interest charges comes from the highest balances those would be best to be shuffled over to PF for the time being.  I was being conservative with the $500/mo not wanting to pry into personal finances and loosely put something together for a plan.  

But I think you get where I'm going with it and with $1K budget you could knock out 2 cards per month potentially.  It feels great getting that power back of not having to make a payment but being able to make one if you want to.  Take the power back from the CCC's and rebuild your savings which I'm sure is a bit depleted after the whole ordeal.  Set yourself up for success and security.  Be thankful they didn't give you huge limits to make this 10X worse in climbing back out from under their thumb.  

Every once in awhile we all get tossed a curve ball when it comes to life / finances.  I've been through quite a bit between not knowing anything about credit to maxing cards out to filing a BK and making a come back from that point in life to stepping in the puddles with crummy cards to shedding them for better ones and inching up the ladder of CL's again to today.  Time heals alot along with having a plan and getting ideas from others that have experience dealing with it.  You'll get there in 2017 and grow upwards with time and patience.

[Dalmus]

 I'm going to take a slightly different view...

 Are you going to be applying for a major line of credit (Home, Auto) in the next 4-5 months? 

 If not, BT cards 1-5 to the new Amex at 0%, and then just pay down cards 6 and 7 while you're paying down the new Amex balance.

 My reasoning is that you want as much of your money as possible to go towards paying down your debt rather than interest.  Utility does not have a memory...  Even though you're going to spike your Amex up to 75%, you'll have it paid down to 0% in 4-5 months (if you stick to your forecast).  Your score will be just as good doing it this way (with fewer invididual bills to pay each month) after 5 months as it would be only transfering $1,500 over (30%) and paying everything off individually over 5 months.  And this way, you pay less over that 5 months.

 Your overall utilization won't change with the balance transfers, obviously, but individually, you'll have 5 cards reporting 0% and only 3 reporting a balance. as opposed to 7 reporting at greater than 50% like you have now.  You will get a little boost in your score immediately.

[Anonymous]

If Utilization being at 75% on the AMEX isn't going to kill my score, I think I will do the following: 

Pay off card 2 (This will be happening in two days) 

Balance transfer cards 1, 3, 4, 5, 6  - This will put a balance on my AMEX of $3896.13 which puts me at 77.92% Utilization on that line, however 5 lines will have 0% utilization. 

Leave the balance on card 7 and pay it down seperately as this card is at zero percent already. Need to get utilization under 30% though which will happen within 30 days. 

Thoughts? I don't want penfed to think I'm overextending myself. 

[austinguy907]

PF knew what they were getting into when they pulled your report for the card.  They're not too figidity like other lenders when it comes to things like this.  They might even give you a CLI after a couple of payments on the account.

[EAJuggalo]

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@nwmusic wrote:

Pay off card 2 (This will be happening in two days) 

Balance transfer cards 1, 3, 4, 5, 6  - This will put a balance on my AMEX of $3896.13 which puts me at 77.92% Utilization on that line, however 5 lines will have 0% utilization. 

Leave the balance on card 7 and pay it down seperately as this card is at zero percent already. Need to get utilization under 30% though which will happen within 30 days.  

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This is what I would do but I would pay card 1 immediately and leave cards 2 and 7 since they both have 0% for at least a few more months.  Since utilization has no memory you should see scores going up consistantly until you have only one card reporting a balance and that less than 30% of it's limit