Balance transfer and credit utilization

Anonymous · ‎03-09-2019

I have a Discover card with around 60% utilization and a 0% apr period that is due to expire soon. My total balance is around 5k. In order to avoid interest payments i've decided to take advantage of 3 balance transfer cards which I have opened for that purpose. I've decided to transfer that balance over those 3 cards (2k/2k/1k, utilization will be 37%/40%/50%), and paying it off during the 15 month promotional period.

The questions I have are - 1, whether that would be benefitial to my credit? (bigger overall credit limit, lower overall utilization, age of accounts not much of an issue because I started around a year ago, during that time i've opened close to 10 cards)

2 - What do you do with balance transfer cards after you're done paying them off? Obviously I wouldn't want to close them because of utilization and credit history, but on the other hand these are pretty plain BT cards with no significant rewards (Barclays Ring, AMEX Everyday, 5/3 Truly Simple).

Thanks!

Anonymous · ‎03-09-2019

@Anonymous wrote:

The questions I have are -

1, whether that would be benefitial to my credit? (bigger overall credit limit, lower overall utilization, age of accounts not much of an issue because I started around a year ago, during that time i've opened close to 10 cards)

ANSWER: Yes it would help your score. But just make sure you have a clear plan for paying off all your CC debt and then never incurring any again.

2 - What do you do with balance transfer cards after you're done paying them off? Obviously I wouldn't want to close them because of utilization and credit history, but on the other hand these are pretty plain BT cards with no significant rewards (Barclays Ring, AMEX Everyday, 5/3 Truly Simple)

ANSWER: You could keep them open or close them. Of the nine open cards you have now, if most are major cards, then I don't see any huge advantage in having three more. If most of the nine cards are store cards, however, then I would keep these three major cards open. Just go to the grocery store once every six months and buy one item on each card. That will keep them open and active.

My own personal bias is to keep a card open unless there is some compelling positive reason to close it, typically because there is an annual fee or because it is a store card. Even annual fees can often be averted by the strategy of a Product Change. But closing cards really doesn't have a downside either, as long as the closure will not bring your total number of open major cards to under five (and as long as the card being closed is one of your younger cards).

Anonymous · ‎03-09-2019

Thanks!

Most of my cards are major cards (Discover, Citi, Amex, CapOne, Barclays) and a few store cards (Amazon Chase, Amazon Synchrony and Citi BestBuy). I would like to keep them open, I just wasn't sure at what point creditors close card/decrease limit due to lack of usage. Using a card rarely as you mentioned (once every 4-6 months) would prevent that?