debt versus credit issue

[Anonymous]

I have three credit cards... one with a $9000 credit line and about $2500 balance one with a $7000 credit line and about $2400 balance one with a $5500 credit line and $0 balance The last one has the best APR by far. Would it be better to move one of the higher APR balances on to the last one and pay it off, or would it be best to move both balances to the last one and then pay it off? I would do the second choice because of the great rate on the last card, but is it bad to have a $5000 balance on a $5500 credit line (but a zero balance on the others)?

[Anonymous]

The absolute best way to gain control is to pay it off not just shift debt.  However, if you can take the score decrease from darn near maxing out a card AND there is a 0% treansfer option AND little or no balance transfer fee - then it may save you some $ if you can pay it in full before the 0% intro period ends.

Util now: 

                Card 1  27.78%

                Card 2  34.29%

                Card 3  0%

   Overall:  22.78%

If you transfer the full balances:

                 Card 1 0%

                 Card 2 0%

                 Card 3  89.90% (very 'not good')

       overall remains the same

Message Edited by Lady_Scarlet on 10-06-2007 07:16 PM

[Anonymous]

Thank you lady scarlet... My credit scores are around 735 and the last card has a 4.99% fixed balance transfer rate and a 3% balance transfer fee. Having this info, does the balance transfer sound like a better idea?

[Anonymous]

You will have a an upfront fee of $147 to transfer the $4900  IF you treat this as interest for the first year it raises the rate by 3% (assuming you can PIF within the year) to 7.99%  If you could pay off the other 2 within a year would you pay more than $147 difference in interest?  If the answer is yes, then it makes sense to BT - if not then the answer is it will cost you to do this.

IF you can quickly get the balance down under 50% (say within 6 months) and can take the hit for the high util - then maybe yes.  BUT you would have to control usage on all the cards and leave only a 1-9% balance on them to not suffer excessively score wise and to get things moving toward  paying off versus continually transfering.to control consumer interest outlay.

I am in the process this month of PIF all my cards (except one which has 0% until Jan which I will PIF before the cutoff date) - this was the easiest way for me to work the system rather than be a slave to it.  Start from scratch and work my plan.

BTW - once these 2 cards have 1-9% or zero balances - give it a month or two and then negotiate rate with the CCC

[Anonymous]

Thanks again Lady scarlet. I think I am going to take the plunge and transfer the balances. If I kept the balances on the other cards, I would definitely have paid more than $147 in interest difference. Also, I don't ever use the cards, so the balances on the other cards will stay at zero.

[Anonymous]

Lady Scarlet gives some sound advice in what she said.

You might also consider the following where CARD1 = 2500, CARD2 = 2400, CARD3 = New Card with lower shiny interest.

CARD1 -> BT to CARD3

After CARD1 has a $0 balance call CARD1 company and ask for a lower APR.

If they give you a lower APR on CARD1 -> BT CARD2 to CARD1 and sock drawer CARD2

If they don't take CARD2 -> BT to CARD3 which is what you were going to do anyway.

After CARD2 has a $0 balance call CARD2 company and ask for a lower APR.

If they give it to you then BT back some balance from CARD3 and save your credit score.

If they don't sock drawer CARD1 and CARD2 and just know your credit score is going to suffer from the high balance to limit ratio on CARD3.

- AZQ