High utilization rate

[Anonymous]

So I'm thinking of using 70% of my credit line to take advantage of 0% interest offer I currently have and lower my student loan. I owe 33k and was planing on putting down 10k and taking 8k with my Freedom card. That way I can pay the 8k during a period of 1 year without acquiring interest , plus I get to lower my loan debt to 15k. The problem I'm seeing is that my credit score will get a hit because I will be using 8k out of 11k.

Is this a smart move?

[Anonymous]

On other thing is, should I pay the 10k in one payment now or split it in two? I'm not sure if lowering my loan that fast will affect my score in a negative way.

PS I was thinking this month 5k and the next month 5k

[Anonymous]

If you spike your utilization rate that high very suddenly, you may risk AA from a lender, either the lender on the card with high utilization, or another card from a different lender who sees the utilization spike and becomes worried. People have done it before, and it doesn't mean automatic AA, but there is always a possibility.

[Anonymous]

AA?

[Anonymous]

What about going up to 8k but little by little? Let's say 2k per month or 1k every 2 weeks, etc.

[Anonymous]

AA is adverse action (i.e., canceling your card or cutting your credit limit)

[Anonymous]

An 8k increase in your utilization and what you owe is a sizeable increase no matter how you look at it. It is hard to predict how the lender on that card and your other lenders will view that. Realistically, it could result in everything being fine or there could be AA. It's happened both ways with people on the board here. No one can tell you for certain in advance.

[Anonymous]

Well I could just lower the amount to 5k.  That's 45% instead of 70%. Once I lower the balance to 2k I can bump it up to 5k again. I'm just trying to lower the principal balance of my loan so I can lower the amount of interest acquired. 

[Anonymous]

What's the interest rate on the student loan?  And what sort of transaction fee to you have to pay for the balance transfer?

[Anonymous]

varies from 3.xx% to 6.xx%. I curently have 0% fee for purchases and balance transfer (12 month remaining)

Loan Type

Direct Subsidized Stafford

Principal Balance *

$3,000.00

Interest Rate

3.150%

Loan Type

Direct Unsubsidized Stafford

Principal Balance *

$4,012.86

Interest Rate

6.550%

Loan Type

Direct Subsidized Stafford

Principal Balance *

$5,579.35

Interest Rate

3.150%

Loan Type

Direct Unsubsidized Stafford

Principal Balance *

$3,451.36

Interest Rate

6.550%

Loan Type

Direct Subsidized Stafford

Principal Balance *

$5,590.07

Interest Rate

3.610%

Loan Type

Direct Unsubsidized Stafford

Principal Balance *

$7,384.04

Interest Rate

3.610%

Loan Type

Direct Subsidized Stafford

Principal Balance *

$1,833.00

Interest Rate

4.410%

Loan Type

Direct Unsubsidized Stafford

Principal Balance *

$2,396.87

Interest Rate

4.410%