New Member With Questions

[Anonymous]

First I want to say thank you to everyone that has contributes to these forums. I've learned a lot in a short time. I have a few questions, which I'll list below:

1) Can you do a cash advance on one card, the transfer the balance to a 0% apr card and avoid paying interest?

2) Is it better to make a large payment to one credit card balance, versus two or 3 smaller payments to other credit card balances?

3) I have a $4,900.00 balance on my Citi Simplicity card, $394.00 Amex ED Preferred, $340.00 Macy's non AMEX, Chase FU $300.00, and DiscoverIt $2,615.00. All are still within the 0% apr intro promo period. Should I focus on the highest balance, or the card I want to use the most?

4) I've received offers for certain credit cards that are way below my current cards in terms of limits, and perks. I'm not applying for them, but would those offers cause my current lenders to decrease my limits?

Thanks in advance to everyone that responds.

[HeavenOhio]

As far as your balances go, I think the first priority would be to pay substantially over the minimum on all of them. After that, I'd focus on the card that has the highest utilization.

[DeeBee78]

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@Anonymous wrote:
First I want to say thank you to everyone that has contributes to these forums. I've learned a lot in a short time. I have a few questions, which I'll list below:

1) Can you do a cash advance on one card, the transfer the balance to a 0% apr card and avoid paying interest?

2) Is it better to make a large payment to one credit card balance, versus two or 3 smaller payments to other credit card balances?

3) I have a $4,900.00 balance on my Citi Simplicity card, $394.00 Amex ED Preferred, $340.00 Macy's non AMEX, Chase FU $300.00, and DiscoverIt $2,615.00. All are still within the 0% apr intro promo period. Should I focus on the highest balance, or the card I want to use the most?

4) I've received offers for certain credit cards that are way below my current cards in terms of limits, and perks. I'm not applying for them, but would those offers cause my current lenders to decrease my limits?

Thanks in advance to everyone that responds.

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1. Yes, but with most cards you will pay a 3-5% cash advance fee, and your balance starts accuring interest the moment of the cash advance. It will take at least a week for a balance transfer to be paid, and you will probably also pay a balance transfer fee unless you have a Chase Slate intro offer or random credit union card, like DCU rewards VISA. 

2. It depends on what your goal is. For maximizing your credit score, you want to have your cards report under 30% utilization. For maximum scoring, you would only let one card report a balance, and only 1-9%. I see you have several cards reporting balances, which also impacts your FICO score, regardless of the utilization. 

3. Are you going to pay all of those off before the 0% promo expires? If not, focus on the highest balances first. If you can get it all paid off in the promo period, knock out those smaller balances first, to eliminate their miniumum payments that are counting towards your debt to income (DTI) ratio. 

4. Some lenders are spooked by new accounts, but not many. Seems like you're carrying a fair bit of debt right now, so you might not receive the best APR's or credit limits if you open a new account. 

[Anonymous]

If you think you'll be able to pay off all those balances during the 0%apr, then dont worry about cash advances and balance transfers; there are fees to make those transactions. Also keep in mind that balance transfers can take weeks to be processed and can also be denied (dont rely on bt's as a last resort).

I would focus on paying the card(s) whose 0%apr expires first. Most of those have 12 - 15 month promos, except simplicity usually has 21 months; which can give you a little extra time to pay off the others before the simplicity.

My personal preference would be to pay the smaller balances first then focus on the bigger balances. It's easier for me to see $4900 and try to pay that versus seeing 4900+300+300+300... and have to decide which one to pay.

Ultimately the decision is yours. As you can see from the different replies, everyone looks at it differently.

[SecretAzure]

Solid advice provided so far but I want to add that I've seen situations (on these forums) where people get credit limit decreases by doing a cash advance. I think it appears as more risky behavior . A credit limit decrease will probably impact FICO scores. And like the others have said, try to get all spend on one card and working towards paying that one down. Start with the highest APR card first though to minimize your total cost of repayment.  (If it has 0% APR for a while, leave that for later)

[Anonymous]

Thank you everyone. Your advice and suggestions are definitely appreciated. I think what I'll do is make a large payment to Citi to bring down balance down by at least 1K. That card has the highest utilization. Even though I have plenty of time to make payments, I don't want them to think they don't matter to me. My other cards have gotten frequent and early payments, so they'll be all right for a month or two with above minimum payments.

[Anonymous]

**Update**

I recently took advantage of an unsecured loan offer with Prosper and although the interest is high, I plan to pay it off well before the final payment date. I only applied for the amount needed, with a little cushion money for my repayment strategy. I decided against paying Citi off, because I'd rack up fees for balance transfers. I decided to pay off in full 6 other credit card accounts. It made more sense in the long run to pay interest now with 1 affordable monthly payment versus struggling to make multiple minimum payments and still factoring in my other expenses.


Now I'm wondering what my credit report will display. I know my utilization will drop, but will the prosper loan show as an installment loan? I received an offer letter from another lender two days ago, but it was secured so I fed that offer letter to my shredder. Has anyone else done this, or something like it?

[K-in-Boston]

Yes, Prosper will show as an installment loan.  Whether you are paying off the loan well before the end of the agreement or not, I can't see any way that using that instead of 0% offers (even if the fees were 5%) makes any financial sense if you still had balance transfer offers available.  Don't they charge a 5% origination fee on top of very high interest rates?  If you are struggling to make minimum payments with 0% APRs (which could foreseeably give you decades to pay off the balance very slowly) how on earth are you able to pay those same balances with a short-term loan with a high APR?!  Something is not adding up here.

[FroggieMom]

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@K-in-Boston wrote:

Yes, Prosper will show as an installment loan.  Whether you are paying off the loan well before the end of the agreement or not, I can't see any way that using that instead of 0% offers (even if the fees were 5%) makes any financial sense if you still had balance transfer offers available.  Don't they charge a 5% origination fee on top of very high interest rates?  If you are struggling to make minimum payments with 0% APRs (which could foreseeably give you decades to pay off the balance very slowly) how on earth are you able to pay those same balances with a short-term loan with a high APR?!  Something is not adding up here.

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+1  This makes ZERO sense to have paid off 0% interest cards with a loan with an origination fee AND high interest. ...you are digging yourself into a deeper debt hole.  Its really not that difficult to manage splitting up your available $$ to 6 cards vs 1.  Also,  if you have already done this....you better SD your cards or you will create an avalache awful fast if you start reusing/accruing more debt on them because then you will have the loan pymt AND credit card pymts.