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Need help managing credit cards and debt

Frequent Contributor

Re: Need help managing credit cards and debt


@Remedios wrote:

I don't think OP had this in mind when he asked very specific questions. 

 

 


I know it wasn't, this is why it's important to point it out.  People fall into the trap of credit card debt very easily, and this is how it starts.  I think we should always be pointing out the dangers of this line of thinking.  I'll continue promoting good financial habits and thinking with any credit card advice, particularly when it appears the poster might be headed for trouble.  The topic name is "Need help managing credit cards and debt" after all, hence my advice.



Message 11 of 22
Contributor

Re: Need help managing credit cards and debt


@SouthJamaica wrote:

@alybutt92 wrote:

@dustinst22 wrote:

@alybutt92 wrote:

 

4) I was also approved for venture and need to spend $5k in 3 months. It says they will let me know the minimum payment. Any idea how is the minimum payment calculated?

 

 


These are extremely dangerous financial waters that you're in.  Couple things that stand out to me:  "need to spend x dollars", "minimum payment",  "need help managing debt".  Lots of red flags.

 

First, your personal finance health should always take priority to credit.  Don't spend more than you normally would just because you're using a credit card or "need" to hit a bonus.  You should spend as if you're using straight cash, and then paying them off in full always.  If you don't have the discipline to do this, you'd be best to get rid of the credit cards -- this is why Dave Ramsey is correct for 99% of people.  Never think of a credit card bonus as something you "must hit", otherwise you'll end up spending more than you normally would.   Spending more and then carrying a balance negates any small bonus you receive, and your credit cards are costing you a lot of money.  Credit cards are a tool to make you money.  If they are costing you money, they should not be used.


Thank you Dustin! 

 

I completely understand that I have to be careful when it comes to managing debt. Also love the quote "Credit cards are a tool to make you money".

 

The reason I asked about carrying a small balance of $1200 is because I am going to get married, and would like to have some extra cash in hand. I rarely carry any balance. I asked about minimum payment because I was curious to know, how it is calculated. 

 

I think I will hit the $5k spending requirement due to wedding expenses, but was wondering if I can save on the interest, thats why I asked about mutiple balance transfer. I can PIF $5k but if I can have some more cash for my wedding, I would love it! I always PIF my cards and once I am done with my wedding expenses, I will PIF again. 

 

So the debt I will have to carry, will be only until Feb end. 


Don't use balance transfers to save on interest, unless you have accounts with no balance transfer fee. The balance transfer fees are worse than interest, especially if you use them on a short term basis.

 

IMHO, since you don't want complexity, you should avoid balance transfers, avoid new accounts, and avoid consolidating accounts.

 

Just chill out, forget about the credit stuff, and concentrate on your spouse to be. And don't spend too much on wedding and marriage related stuff, it's your life after the wedding that counts.

 

And credit cards are not a way to make money unless you own a bank.


Yeah, I was approved for AMEX ED with no balance transfer fees and 0% APR, that's why I was excited to know about the balance transfer, to see if I can carry a balance without any fees for couple of months.

 

And I will take your advice and will try to keep it simple and enjoy my wedding month Smiley Very Happy

Message 12 of 22
Super Contributor

Re: Need help managing credit cards and debt


@dustinst22 wrote:

@Remedios wrote:

I don't think OP had this in mind when he asked very specific questions. 

 

 


I know it wasn't, this is why it's important to point it out.  People fall into the trap of credit card debt very easily, and this is how it starts.  I think we should always be pointing out the dangers of this line of thinking.  I'll continue promoting good financial habits and thinking with any credit card advice, particularly when it appears the poster might be headed for trouble.


+1 I'm with @dustins22 on this Smiley Happy


FICO8 EQ 755 TU 776 EX 746 Total revolving limits 643900 (533900 reporting)
Message 13 of 22
Moderator

Re: Need help managing credit cards and debt


1) Can I merge my CapOne plat and QS? I can pay off CapOne plat and ask for account merge and then do a PC to Savor (if available). Statement date for both these cards is the same, so once I do this, will it take effect immidietely and CapOne will be reported as closed on my report after the statement date?

 

2) I am carrying a balance of $1200 on my BofA rewards, so I was thinking I will do balance transfer to my new AMEX ED. How does balance transfer work? Does it mean that AMEX will pay directly to BofA and my BofA rewards will report $0 balance and I will carry $1200 on my AMEX? ($0 transfer fees and 0% APR fees for 15 months). 

 

3) How often can I request a balance transfer? Is there a inquiry for a balance transfer? Does it affect your credit score in anyway?

 

4) I was also approved for venture and need to spend $5k in 3 months. It says they will let me know the minimum payment. Any idea how is the minimum payment calculated?


1.) Yes, you can merge them right online.  As soon as the statements close and the credit bureaus have received and updated the information from CapOne (usually within a few days), the closed one will report as closed and the new one will report with the new credit limit.

 

2.) For Amex balance transfers, you'll generally need to call them to perform the transfer.  You can transfer up to 75% of your credit line.  Amex will electronically pay Bank of America and it works just like you made a regular payment on the BoA side.

 

3.) With Amex it's generally only when first opening an account if there's an offer.  It's rare, but they do give out targeted offers to existing cardholders sometimes.  They may do a BT for you later on without an offer, but it would likely be at your regular purchase (or even cash) APR for the card, which would only make sense if you didn't have a promotional offer elsewhere or is the card you had the balance on had an obscene APR or expiring promotional balance with retroactive interest.

 

4.) I believe the minimum payment for Capital One is $25 or 1% of the current balance plus any fees and interest, whichever is higher (unless the balance is below $25, of course).  So a $5,000 purchase with no fees or interest should  be $50.  Keep in mind that if you don't pay the full statement balance, you'll start to accrue interest that will quickly offset any rewards earned and eat into your signup bonus.


Message 14 of 22
Super Contributor

Re: Need help managing credit cards and debt


@alybutt92 wrote:

@SouthJamaica wrote:

@alybutt92 wrote:

@dustinst22 wrote:

@alybutt92 wrote:

 

4) I was also approved for venture and need to spend $5k in 3 months. It says they will let me know the minimum payment. Any idea how is the minimum payment calculated?

 

 


These are extremely dangerous financial waters that you're in.  Couple things that stand out to me:  "need to spend x dollars", "minimum payment",  "need help managing debt".  Lots of red flags.

 

First, your personal finance health should always take priority to credit.  Don't spend more than you normally would just because you're using a credit card or "need" to hit a bonus.  You should spend as if you're using straight cash, and then paying them off in full always.  If you don't have the discipline to do this, you'd be best to get rid of the credit cards -- this is why Dave Ramsey is correct for 99% of people.  Never think of a credit card bonus as something you "must hit", otherwise you'll end up spending more than you normally would.   Spending more and then carrying a balance negates any small bonus you receive, and your credit cards are costing you a lot of money.  Credit cards are a tool to make you money.  If they are costing you money, they should not be used.


Thank you Dustin! 

 

I completely understand that I have to be careful when it comes to managing debt. Also love the quote "Credit cards are a tool to make you money".

 

The reason I asked about carrying a small balance of $1200 is because I am going to get married, and would like to have some extra cash in hand. I rarely carry any balance. I asked about minimum payment because I was curious to know, how it is calculated. 

 

I think I will hit the $5k spending requirement due to wedding expenses, but was wondering if I can save on the interest, thats why I asked about mutiple balance transfer. I can PIF $5k but if I can have some more cash for my wedding, I would love it! I always PIF my cards and once I am done with my wedding expenses, I will PIF again. 

 

So the debt I will have to carry, will be only until Feb end. 


Don't use balance transfers to save on interest, unless you have accounts with no balance transfer fee. The balance transfer fees are worse than interest, especially if you use them on a short term basis.

 

IMHO, since you don't want complexity, you should avoid balance transfers, avoid new accounts, and avoid consolidating accounts.

 

Just chill out, forget about the credit stuff, and concentrate on your spouse to be. And don't spend too much on wedding and marriage related stuff, it's your life after the wedding that counts.

 

And credit cards are not a way to make money unless you own a bank.


Yeah, I was approved for AMEX ED with no balance transfer fees and 0% APR, that's why I was excited to know about the balance transfer, to see if I can carry a balance without any fees for couple of months.

 

And I will take your advice and will try to keep it simple and enjoy my wedding month Smiley Very Happy


....... and the many happy years afterwards Smiley Happy


FICO8 EQ 755 TU 776 EX 746 Total revolving limits 643900 (533900 reporting)
Message 15 of 22
Established Contributor

Re: Need help managing credit cards and debt

The balance transfer to Amex will be painless and it will look just like a payment on the other card. What you want to be careful about is to make sure the interest savings on the first card is going to offset the balance transfer fee charge. You may have 0% interest on BT's, but will pay the 3% of the transfer amount right off the bat. Depending on when you are planning on paying down the balance this may be more actual money than you would have paid anyway. 

 

Transfers also don't count as spend so it won't help you with any subs. I'm not sure if that was part of the plan or not on this. I would watch the utilization on both cards and make sure I wasn't kicking myself into a higher utilization bracket on the second card by doing a transfer. 

 

One thing to keep in mind is Amex may allow you to do a 3X CLI on your 61st day, but they are less likely to give it if you are carrying a  balance. I shot myself in the foot with this one by transferring and I have not gotten the balance down, so I was denied for my 3x cli as a result.

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 12/8/18:


Goal Score: 750+
Message 16 of 22
Contributor

Re: Need help managing credit cards and debt


@K-in-Boston wrote:

1) Can I merge my CapOne plat and QS? I can pay off CapOne plat and ask for account merge and then do a PC to Savor (if available). Statement date for both these cards is the same, so once I do this, will it take effect immidietely and CapOne will be reported as closed on my report after the statement date?

 

2) I am carrying a balance of $1200 on my BofA rewards, so I was thinking I will do balance transfer to my new AMEX ED. How does balance transfer work? Does it mean that AMEX will pay directly to BofA and my BofA rewards will report $0 balance and I will carry $1200 on my AMEX? ($0 transfer fees and 0% APR fees for 15 months). 

 

3) How often can I request a balance transfer? Is there a inquiry for a balance transfer? Does it affect your credit score in anyway?

 

4) I was also approved for venture and need to spend $5k in 3 months. It says they will let me know the minimum payment. Any idea how is the minimum payment calculated?


1.) Yes, you can merge them right online.  As soon as the statements close and the credit bureaus have received and updated the information from CapOne (usually within a few days), the closed one will report as closed and the new one will report with the new credit limit.

 

2.) For Amex balance transfers, you'll generally need to call them to perform the transfer.  You can transfer up to 75% of your credit line.  Amex will electronically pay Bank of America and it works just like you made a regular payment on the BoA side.

 

3.) With Amex it's generally only when first opening an account if there's an offer.  It's rare, but they do give out targeted offers to existing cardholders sometimes.  They may do a BT for you later on without an offer, but it would likely be at your regular purchase (or even cash) APR for the card, which would only make sense if you didn't have a promotional offer elsewhere or is the card you had the balance on had an obscene APR or expiring promotional balance with retroactive interest.

 

4.) I believe the minimum payment for Capital One is $25 or 1% of the current balance plus any fees and interest, whichever is higher (unless the balance is below $25, of course).  So a $5,000 purchase with no fees or interest should  be $50.  Keep in mind that if you don't pay the full statement balance, you'll start to accrue interest that will quickly offset any rewards earned and eat into your signup bonus.


THIS IS PERFECT!! Thank you for your reply, this will help me a lot!!

 

 Appreciate you taking out time and answering all my concerns!

Message 17 of 22
Contributor

Re: Need help managing credit cards and debt


@dynamicvb wrote:

The balance transfer to Amex will be painless and it will look just like a payment on the other card. What you want to be careful about is to make sure the interest savings on the first card is going to offset the balance transfer fee charge. You may have 0% interest on BT's, but will pay the 3% of the transfer amount right off the bat. Depending on when you are planning on paying down the balance this may be more actual money than you would have paid anyway. 

 

Transfers also don't count as spend so it won't help you with any subs. I'm not sure if that was part of the plan or not on this. I would watch the utilization on both cards and make sure I wasn't kicking myself into a higher utilization bracket on the second card by doing a transfer. 

 

One thing to keep in mind is Amex may allow you to do a 3X CLI on your 61st day, but they are less likely to give it if you are carrying a  balance. I shot myself in the foot with this one by transferring and I have not gotten the balance down, so I was denied for my 3x cli as a result.


Thank you dynamic!

 

Yes, I had my eyes on 3X CLI! Thank you for letting me know about that. I will make sure not to carry much balance before my 2nd statement cuts.

Message 18 of 22
Moderator

Re: Need help managing credit cards and debt


@dynamicvb wrote:

The balance transfer to Amex will be painless and it will look just like a payment on the other card. What you want to be careful about is to make sure the interest savings on the first card is going to offset the balance transfer fee charge. You may have 0% interest on BT's, but will pay the 3% of the transfer amount right off the bat. Depending on when you are planning on paying down the balance this may be more actual money than you would have paid anyway. 

 

Transfers also don't count as spend so it won't help you with any subs. I'm not sure if that was part of the plan or not on this. I would watch the utilization on both cards and make sure I wasn't kicking myself into a higher utilization bracket on the second card by doing a transfer. 

 

One thing to keep in mind is Amex may allow you to do a 3X CLI on your 61st day, but they are less likely to give it if you are carrying a  balance. I shot myself in the foot with this one by transferring and I have not gotten the balance down, so I was denied for my 3x cli as a result.


Like the Chase Slate and Bank of America BankAmericard, the Amex Everyday has a $0 balance transfer fee when done early on after account opening.  It's been a fairly recent change for Amex and BoA.  Carrying a balance is going be a YMMV situation when it comes to CLIs.  DW milked a small balance transfer for a year on her ED and went from a $2k to $32k credit line in 14 months.

 

--

 

Let's please remember to keep all comments FSR.  OP asked some pretty straightforward questions; no need to sound the panic alarm.


Message 19 of 22
Valued Contributor

Re: Need help managing credit cards and debt


@dustinst22 wrote:

@alybutt92 wrote:

 

4) I was also approved for venture and need to spend $5k in 3 months. It says they will let me know the minimum payment. Any idea how is the minimum payment calculated?

 

 


These are extremely dangerous financial waters that you're in.  Couple things that stand out to me:  "need to spend x dollars", "minimum payment",  "need help managing debt".  Lots of red flags.

 

First, your personal finance health should always take priority to credit.  Don't spend more than you normally would just because you're using a credit card or "need" to hit a bonus.  You should spend as if you're using straight cash, and then paying them off in full always.  If you don't have the discipline to do this, you'd be best to get rid of the credit cards -- this is why Dave Ramsey is correct for 99% of people.  Never think of a credit card bonus as something you "must hit", otherwise you'll end up spending more than you normally would.   Spending more and then carrying a balance negates any small bonus you receive, and your credit cards are costing you a lot of money.  Credit cards are a tool to make you money.  If they are costing you money, they should not be used.


Its highly ironic that you'd be advocating Dave Ramsey with all those credit cards in your signature.  Perhaps you fancy yourself as one of the 1% who love to dictate what others should do.





Message 20 of 22