Making large purchase

[lshwn]

Hello,

I need to use my credit cards for a $5K purchase.  I might need 6 months to pay it off.  Would it be best to spread the amount over a few credit cards to not exhaust my utilization on one credit card. For example, should I charge $1K on a few cards?

Thank you.

[Jnbmom]

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@lshwn wrote:

Hello,

I need to use my credit cards for a $5K purchase.  I might need 6 months to pay it off.  Would it be best to spread the amount over a few credit cards to not exhaust my utilization on one credit card. For example, should I charge $1K on a few cards?

Thank you.

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There are many factors involved . Do you have a strong profile , high score or are you rebuilding? Do you have a card with a large limit that you can use ? If you spread it out on low limit cards and max out your utilization you will take a hit.

Are you planning any major purchase home or car? If not FICO has no memory if you can pay it off in 6 months depending on your scores it will bounce back.

[FinStar]

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@lshwn wrote:

Hello,

I need to use my credit cards for a $5K purchase.  I might need 6 months to pay it off.  Would it be best to spread the amount over a few credit cards to not exhaust my utilization on one credit card. For example, should I charge $1K on a few cards?

Thank you.

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In addition to what was mentioned above, keep in mind that when it comes to scoring metrics, the number of accounts reporting a balance is taken into consideration in addition to individual account utilization. So, while you can spread $5K into multiple accounts, you'll now have 5 accounts reporting balances (assuming you charge $1K on each) in whichever utilization buckets they may report depending on the limits on those particular accounts and how many active revolving tradelines you have in aggregate.

[lshwn]

Scores are averaging 650. I have been rebuilding for a year with much success. None of my cards have more than $2K credit limit. 

I am not planning a major purchase like a car or home loan at the moment. 

Thanks. 

[OmarGB9]

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@lshwn wrote:

Scores are averaging 650. I have been rebuilding for a year with much success. None of my cards have more than $2K credit limit. 

I am not planning a major purchase like a car or home loan at the moment. 

Thanks. 

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Based on this post, and specifically on the part I bolded, it sounds like you don't really have a choice and you're going to HAVE to go ahead and spread it out amongst at least 3 cards, but that'd be maxing out two of them at $2k each. If you had at least one card with a, say, $10k limit, that'd make it easier. But as it stands, I'd suggest just spreading it out among 5 cards. But in all honesty, it's probably a similar outcome either way in this instance. 

The only other option would be to hold off on said purchase and save up for it.

[pizzadude]

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@lshwn wrote:

Hello,

I need to use my credit cards for a $5K purchase.  I might need 6 months to pay it off.  Would it be best to spread the amount over a few credit cards to not exhaust my utilization on one credit card. For example, should I charge $1K on a few cards?

Thank you.

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Good advice in the above posts regarding your utilization - another factor to consider is the amount of interest you'll pay.  

I'd lean towards whatever option will result in paying the least amount of interest.  Also if you current cards have high rates you could consider applying for a new card if it has a 0% introductory offer. 

[SouthJamaica]

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@lshwn wrote:

Hello,

I need to use my credit cards for a $5K purchase.  I might need 6 months to pay it off.  Would it be best to spread the amount over a few credit cards to not exhaust my utilization on one credit card. For example, should I charge $1K on a few cards?

Thank you.

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Yes it would be. And try to keep each card reporting less than 50% of its limit.