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Help my friend with 0% APR strategy

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1LostArk
Regular Contributor

Help my friend with 0% APR strategy

A friend of mine lost their job and has been forced to accumulate some credit card debt. They are very responsible, and before the unfortunate layoff had $0 debt. As soon as they knew they'd be living on credit cards, I advised they open a Chase Freedom Flex with 15 month 0% APR offer. That card's 0% APR offer expires in September, and even if my friend finds a new job tomorrow, it's not likely they'd be able to pay off the $8k balance before then. So, I've been trying to come up with a plan for them to punt that debt until they are stable. Current situation:

 

FICO 8 Scores (Not Vantage): 750+ across the board
Overall Utilization: 17% (About $8,000)

New Accounts: 2/24
Total Available Credit: ~$50k

 

Friend has mailer offers in hand for the following:

 

BofA Cash Unlimited, 15 months ($200 SUB)

Discover It, 18 months

Wells Fargo Autograph, 21 months                      } Which lender is most likely to give the highest starting limit?

Citi Diamond, 21 months

Citi Simplicity, 18 months

 

Now, my thinking is that if my friend accepts one of these mailer offers, as soon as the balance transfer posts to their Chase Freedom, Chase will report it to the bureaus and there will be a window where their utilization drops to 0% (which is why I advised Chase as their the first 0% card). Once that occurs, I thought perhaps it would be opportune to try and pick up a big SUB, preferably also with 0% APR for purchases to continue using until my friend is working again. 

 

Any and all input and advice appreciated!


Business Cards:
Message 1 of 13
12 REPLIES 12
SouthJamaica
Mega Contributor

Re: Help my friend with 0% APR strategy


@1LostArk wrote:

A friend of mine lost their job and has been forced to accumulate some credit card debt. They are very responsible, and before the unfortunate layoff had $0 debt. As soon as they knew they'd be living on credit cards, I advised they open a Chase Freedom Flex with 15 month 0% APR offer. That card's 0% APR offer expires in September, and even if my friend finds a new job tomorrow, it's not likely they'd be able to pay off the $8k balance before then. So, I've been trying to come up with a plan for them to punt that debt until they are stable. Current situation:

 

FICO 8 Scores (Not Vantage): 750+ across the board
Overall Utilization: 17% (About $8,000)

New Accounts: 2/24
Total Available Credit: ~$50k

 

Friend has mailer offers in hand for the following:

 

BofA Cash Unlimited, 15 months ($200 SUB)

Discover It, 18 months

Wells Fargo Autograph, 21 months                      } Which lender is most likely to give the highest starting limit?

Citi Diamond, 21 months

Citi Simplicity, 18 months

 

Now, my thinking is that if my friend accepts one of these mailer offers, as soon as the balance transfer posts to their Chase Freedom, Chase will report it to the bureaus and there will be a window where their utilization drops to 0% (which is why I advised Chase as their the first 0% card). Once that occurs, I thought perhaps it would be opportune to try and pick up a big SUB, preferably also with 0% APR for purchases to continue using until my friend is working again. 

 

Any and all input and advice appreciated!


I think your friend would be better off with a credit union, non-rewards, platinum card with no balance transfer fee.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 2 of 13
Aim_High
Senior Contributor

Re: Help my friend with 0% APR strategy


@1LostArk wrote:
  • A friend of mine lost their job and has been forced to accumulate some credit card debt.
  • Overall Utilization: 17% (About $8,000)
  • Any and all input and advice appreciated!

I have full empathies with your friend, @1LostArk, but he has a problem.  He has 17% utilization and apparently no income to report, unless he is getting some sort of separation benefit from the employer or unemployment pay.   Since he is responsible and I assume honest, what will he put on his application for his income amount and source?   Even with unemployment compensation, it's likely less than he made when working.   To get approved, an applicant must appear to have the ability to repay, regardless of FICO score.  And if he is honest about lower (or no) income, it will likely mean a lower than desired starting limit.  

 

I'm sure he wants to get out from under the high APR debt as soon as possible, but in my opinion, he should wait until he starts a new job, has documentable income, and could qualify for a better SL than he could when unemployed. 


Business Cards


Length of Credit > 40 years; Total Credit Limits >$850K
Top Lender TCL - Chase 156.4 - BofA 99.7 - AMEX 95.0 - CITI 94.5 - NFCU 80.0
AoOA > 30 years (Jun 1993); AoYA (Aug 2023)
* Hover cursor over cards to see name & CL, or press & hold on mobile app.
Message 3 of 13
Kforce
Valued Contributor

Re: Help my friend with 0% APR strategy

Regardless of mailers received.

If unemployed, unlikely any new card would be approved.

Might need to live on current card set.

Needs to find a job soon.

 

@Aim_High was faster

Message 4 of 13
ptatohed
Valued Contributor

Re: Help my friend with 0% APR strategy

That looks like a lot of effort on 1LA's part to avoid using he she his hers!  Smiley LOL

 

Anyway, best of luck to your friend.  I hope they find a job soon.  

 

 

5% CB rotating: ;
Everyday 3% CB: ;
Everyday 5%: ;
Companion Card: ;
Everyday 2.2% CB: ;
Retired to sock drawer after AOD (kept alive w/ 1 purchase every 6 mo): ;
On my radar: ;
Still Waiting for an Invite: ;
No hope:
Message 5 of 13
CorpCrMgr1
Frequent Contributor

Re: Help my friend with 0% APR strategy

Agree with a job first. Hope their luck changes!

Message 6 of 13
Citylights18
Valued Contributor

Re: Help my friend with 0% APR strategy


@Kforce wrote:

Regardless of mailers received.

If unemployed, unlikely any new card would be approved.

Might need to live on current card set.

Needs to find a job soon.

 

@Aim_High was faster


Aren't card applications stated income?

 

Other income can count such as rental properties and investment income.

Official travel point totals as of 12/26/23 (1,382,693 Total Points)
Chase Ultimate Rewards 661,525 | IHG One Rewards 144,443 | Hilton Honors 143,801 | AMEX Membership Rewards 102,729 | World of Hyatt 90,413 | Marriott Bonvoy 65,343 | Citi Thank You 62,712 | Wells Fargo Rewards 33,652 | Southwest Rapid Rewards 28,105 | United MileagePlus 13,316 | British Airways Avios 12,333 | Jet Blue TrueBlue 11,661 | NASA Platinum Rewards 1,883 | AA Advantage 1,744 | Navy Federal Rewards 792 | Delta Sky Miles 175 | Virgin Atlantic Virgin Points 100 | Lowes Business Rewards 6,992 ($69.92) | Amazon Rewards 475 ($4.75) | Discover CB 499 ($4.99)
Message 7 of 13
Citylights18
Valued Contributor

Re: Help my friend with 0% APR strategy


Friend has mailer offers in hand for the following:

 

BofA Cash Unlimited, 15 months ($200 SUB)

Discover It, 18 months

Wells Fargo Autograph, 21 months                      } Which lender is most likely to give the highest starting limit?

Citi Diamond, 21 months

Citi Simplicity, 18 months

 

Now, my thinking is that if my friend accepts one of these mailer offers, as soon as the balance transfer posts to their Chase Freedom, Chase will report it to the bureaus and there will be a window where their utilization drops to 0% (which is why I advised Chase as their the first 0% card). Once that occurs, I thought perhaps it would be opportune to try and pick up a big SUB, preferably also with 0% APR for purchases to continue using until my friend is working again. 

 

Any and all input and advice appreciated!


My opinion the longer 18 or 21 month cards which do not produce rewards are best for BTs rather than taking those out to spend on.

 

The shorter term ones like 12 to 15 are more for rewards and some accumulation. Your friend then could take one of these out for expenses and then BT to an 18-21 month card later to keep interest costs down.

 

Ideally if investment growth is strong enough pay off the cards before they are due to avoid having to BT around the debt.

Official travel point totals as of 12/26/23 (1,382,693 Total Points)
Chase Ultimate Rewards 661,525 | IHG One Rewards 144,443 | Hilton Honors 143,801 | AMEX Membership Rewards 102,729 | World of Hyatt 90,413 | Marriott Bonvoy 65,343 | Citi Thank You 62,712 | Wells Fargo Rewards 33,652 | Southwest Rapid Rewards 28,105 | United MileagePlus 13,316 | British Airways Avios 12,333 | Jet Blue TrueBlue 11,661 | NASA Platinum Rewards 1,883 | AA Advantage 1,744 | Navy Federal Rewards 792 | Delta Sky Miles 175 | Virgin Atlantic Virgin Points 100 | Lowes Business Rewards 6,992 ($69.92) | Amazon Rewards 475 ($4.75) | Discover CB 499 ($4.99)
Message 8 of 13
Kforce
Valued Contributor

Re: Help my friend with 0% APR strategy


@Citylights18 wrote:

@Kforce wrote:

Regardless of mailers received.

If unemployed, unlikely any new card would be approved.

Might need to live on current card set.

Needs to find a job soon.


Aren't card applications stated income?

Other income can count such as rental properties and investment income.


True.

I was just assuming loss of job would make it difficult to get

a decent new card

Message 9 of 13
Aim_High
Senior Contributor

Re: Help my friend with 0% APR strategy


@Kforce wrote:

@Citylights18 wrote:

Aren't card applications stated income?

Other income can count such as rental properties and investment income.


True.

I was just assuming loss of job would make it difficult to get a decent new card


While it's always possible, I would doubt someone out of a job and running up $8K in new credit card has much (if any) alternative income sources such as rental property or investments.   

 

And I do agree that loss of a job would inhibit "good" approvals - if any not approvals at all.  

 

Better to wait and sort it out after the employment is addressed.

 


Business Cards


Length of Credit > 40 years; Total Credit Limits >$850K
Top Lender TCL - Chase 156.4 - BofA 99.7 - AMEX 95.0 - CITI 94.5 - NFCU 80.0
AoOA > 30 years (Jun 1993); AoYA (Aug 2023)
* Hover cursor over cards to see name & CL, or press & hold on mobile app.
Message 10 of 13
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