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BT or no?

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BT or no?

These are the cards for this situation:

1 - Capital One: Limit 12k,  balance  6.8k  (UTI - 57%)  APR - 24.4

2 - Chase:  Limit 17.5k, balance 3.5k  (UTI - 20%)  APR - 24.49

3 - NFCU card: Limit 14k, balance 0  (paid it off last month).  APR - 11.24%

 

 

NFCU is giving an option to BT to its card for 12 months at 1.99, then the standard rate.    Calculators are telling me if I pay $862/month, I'll have them paid off at 12 months.  But Mint is telling me if I pay that amount in my current situation, I'll have it paid off in 13 months (one month later).   Obviously it's not that much of a difference in time pay off, so I'm more curious score wise, is it worth putting 75% of my limit onto the NFCU card to drop the other 2 cards to 0%, or should I leave it as is and pay chase down to 0 then pay capital one? 

Message 1 of 14
13 REPLIES 13
Senior Contributor

Re: BT or no?

I'm not sure those calculations are correct that you'll pay those balances off in 13 months with 24.xx% APR and only pay them off 1 month earlier with a 1.99% APR, but you'll certainly save a bunch of interest expense.

But from a utilization standpoint any single credit account with 50+% utilization really hurts your credit score, been there, done that. And 75% util is even worse. From the Fico scoring model:

0-9% Excellent
10-29% Good
30-49% Fair
50-74% Poor
75%+ Very Poor


Fico 08: 734/716/734 TU/EX/EQ
Message 2 of 14
Highlighted
Frequent Contributor

Re: BT or no?


@DaveInAZ wrote:

I'm not sure those calculations are correct that you'll pay those balances off in 13 months with 24.xx% APR and only pay them off 1 month earlier with a 1.99% APR, but you'll certainly save a bunch of interest expense.

But from a utilization standpoint any single credit account with 50+% utilization really hurts your credit score, been there, done that. And 75% util is even worse. From the Fico scoring model:

0-9% Excellent
10-29% Good
30-49% Fair
50-74% Poor
75%+ Very Poor


 

Strange as it sounds, they actually are correct.   I just ran it through Excel.  Current state - chase would be paid off in 6 payments, then shifting the money from there to capital one will have that paid off by payment 13.    Transferring would have it paid off in 12 payments.  It would save me about $1500 if I transferred, so there is that.  But still leaves the question is it worth upping my UTI that much.

Message 3 of 14
Senior Contributor

Re: BT or no?

Well, if you're not planning on applying on any new credit in the next 6-8 months until you have paid the BT down to under 50% the heck with the util affect on your credit score, saving $1500 in interest would be more important to me than a temporary hit to my score.  Or you could do a partial BT and keep the Navy card under 75%.


Fico 08: 734/716/734 TU/EX/EQ
Message 4 of 14
Super Contributor

Re: BT or no?


@seruby wrote:

These are the cards for this situation:

1 - Capital One: Limit 12k,  balance  6.8k  (UTI - 57%)  APR - 24.4

2 - Chase:  Limit 17.5k, balance 3.5k  (UTI - 20%)  APR - 24.49

3 - NFCU card: Limit 14k, balance 0  (paid it off last month).  APR - 11.24%

 

 

NFCU is giving an option to BT to its card for 12 months at 1.99, then the standard rate.    Calculators are telling me if I pay $862/month, I'll have them paid off at 12 months.  But Mint is telling me if I pay that amount in my current situation, I'll have it paid off in 13 months (one month later).   Obviously it's not that much of a difference in time pay off, so I'm more curious score wise, is it worth putting 75% of my limit onto the NFCU card to drop the other 2 cards to 0%, or should I leave it as is and pay chase down to 0 then pay capital one? 


It's a no-brainer that you should do a balance transfer to NFCU. There are 3 ways to play it, all of them good.

 

1. Transfer $3900 to the NFCU card from the Capital One card. That way your NFCU card is only at 28%, and your Cap One card is down to 24%. That switch will improve your scores and save you money.

 

2. Transfer the entire Capital One balance to the NFCU card. That way you will be saving massive interest, your Cap One card will be at zero, and your NFCU card will be at 48.5%, which will probably improve your score somewhat, albeit to a lesser degree than 1 above. With this option you're saving money, and definitely not making your score worse.

 

3. If you transfer both Cap One and Chase, you will be saving a ton of money, your NFCU card will be at 73%, and your score will probably still be better than it is now, because you're adding 2 zeroed out accounts.

 

 


Total revolving limits 730000 (603500 reporting) FICO 8 scores: EQ 722 TU 764 EX 734
Message 5 of 14
Frequent Contributor

Re: BT or no?

I simply cannot imagine many scenarios where it would make sense NOT to balance transfer everything to the NFCU. And, the scenarios I can imagine are outliers. This is a no brainer. 


Message 6 of 14
Frequent Contributor

Re: BT or no?


@seruby wrote:

It would save me about $1500 if I transferred, so there is that. 


This would be enough for me to say yes.

Current Score: Mar 2019: EX FICO8 779, TU FICO8 800, EQ FICO 780, TU Vantage 773, EQ Vantage 786
AoOA: closed: 35 years, open: 24 years; AAoA: 11.8 years; Inquiries: 2019: 2, 2018: 3; No BK ever, 1 30 day late in 2013
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Slate, Chase Amazon, Chase CSP, Sync Lowes, Sync JC Penney - total CL 129k
Loans: Prosper (20k/3yrs 7.14%), Lending Club (10k/3yrs 5.89%), Chase car loan (35k/6yrs 0.9%)
Message 7 of 14
Super Contributor

Re: BT or no?


@FlaDude wrote:

@seruby wrote:

It would save me about $1500 if I transferred, so there is that. 


This would be enough for me to say yes.


Me three.

 

Unless you NEED a higher score for something, I'd save the dollars and the score will recover.  Smiley Happy

11/01/19 Fico 8: EX 726, EQ 721, TU 747.
11/08/19 Fico 9: EX 733, EQ 740, TU no idea...
Zero percent financing is where the devil lives...

Firmly in the garden until the next pre-approval arrives!
Message 8 of 14
Regular Contributor

Re: BT or no?

Could you do a mixture of both? BT the 6K over and pay it down until it’s 3k. Then BT the remaining 3.5k? That would keep your uti under 50% on a single card, and still give you a lower interest rate on the higher balance? You’ll end up paying more for the months the 3.5 stays with the 24% but you’ll save some money and still save your score (if both are important to you).

 

Edit: Didn't see SouthJamaica's post. Oops. I was basically suggesting option 2, but I agree, I'd take the score hit and not apply for anything until the uti has dropped below 50% in 6 months or so.


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Goal Score: 720|720|720


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Message 9 of 14
Frequent Contributor

Re: BT or no?

I'm going to consider one of those options actually.  The 1.99% offer though is only good until the end of this month, but I still have some time to decide.     Even if I did it your way though, I'd likely still save money since the Purchases APR on my BT card is 11.24%,  and now I'm seeing options that show how to save money and keep all 3 cards under 50%.

Message 10 of 14
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