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Balance Transfer Dilemma

whocares
Valued Member

Balance Transfer Dilemma

I've got a couple credit cards that have the following utilization and newly approved card with a 0% offer:
Card 1 - $4k/$6k = 67% utilization  | 21% APR = $77/mo interest
Card 2 - $7k/$12k = 58% utilization  | 18% APR = $117/mo interest

New Card 3 - $0/$16k with 0% interest for 18 mo w/ 3% balance transfer fee

 

My question is which option is better from a FICO score & financial perspective?
A)  Transfer all balances ($11k) to Card 3 and incur a $330 balance transfer fee while saving on monthly interest ($194/mo) over the long term.  This would put the utlization for Card 3 at 68% ($11k/$16k)

Card 1 - $0k/$6k = 0% utilization  | 21% APR 
Card 2 - $0k/$12k = 0% utilization  | 18% APR

New Card 3 - $11/$16k = 68% utilization | 0% APR for 18 mo | Balance transfer fee $330 (3%)

B)  Transfer PART of the balances on Card 1/2 to get them under 30% each to Card 3.

Card 1 - $2070/$6k = 30% utilization  | 21% APR = $37/mo interest | Transferred $1930 to Card 3
Card 2 - $3600k/$12k = 30% utilization  | 18% APR) = $48/mo interest | Transferred $3400 to Card 3

New Card 3 - $5330/$16k = 33% utilization | 0% APR for 18 mo | Balance transfer fee $160 (3%)

 

I plan on paying at least $1k/mo until cards are paid-in-full (approx 1 year).  Is it better from a FICO scoring perspective to "spread" the balances across multiple cards to try and keep the utilization on each under 30% or is it better to have a high utilization/balance on 1 card and have a $0 balance on the other 2?

 

Looking for feedback/experience.  Thanks!

Message 1 of 8
7 REPLIES 7
SlideOrInsert
Regular Contributor

Re: Balance Transfer Dilemma

I usually see people respond with scenario B because utilization seems to be such a scary thing for most people. I do not get it and it makes me cringe "why!"

 

Assuming you go with A, you are technically getting a bump for AZEO right? Is the penalty for utilization on ONE card greater than the bump for AZEO? You do not say what your score is, but would the penalty for utilization on ONE card be like going from a 800 to 780? I doubt it, but still a favorable score. Lastly, after 6 months of payments you will be down to about 30% util anyways.

 

I would rather save the $434 difference in interest and fees for the year and put it to better use. My wife would appreciate me with the $434 spent on her more than any bank would appreciate me. Smiley Happy

 

Aratemomo pmtcumipmt
11000012($917)$0
fee   ($330)
     
Bratemomo pmtcumipmt
20702112($193)($243)
36001812($330)($361)
5330012($444)$0
fee   ($160)
chase
$8900
discover
$20000
citi
$19900
bofa
$30000
nfcu
$29000
nfcu
$16000
Garden Club Spade
 
Message 2 of 8
FlaDude
Established Contributor

Re: Balance Transfer Dilemma

I'd also trade a short term score hit to save $$ on interest.

Scores: March 21 FICO 8: EX 810, TU 808, EQ 813
AoOA: closed: 36 years, open: 25 years; AAoA: 11.8 years
Amex Gold, Amex Green, Amex Blue, Amex ED, Amex Delta Gold, Amex Hilton Surpass, BoA Platinum Plus, Chase Freedom Unlimited, Chase Amazon, Chase CSP, Chase United Explorer, Citi AA Plat, Sync Lowes, Sync JC Penney - total CL 145k
Loans: Chase car loan (35k/6yrs 0.9%)
Message 3 of 8
AverageJoesCredit
Community Leader
Mega Contributor

Re: Balance Transfer Dilemma

Unless you need your score in the short term, i would save interest and put everything at 0% apr. That 68% will go down monthly with every payment. Just my opinion.
NN7! Fico math 1 HP = 20 CG LIEr Club Plankowner
Message 4 of 8
HeavenOhio
Community Leader
Senior Contributor

Re: Balance Transfer Dilemma

Transfer the balances. 68% utilization is fine as a starting point.

 

As far as scoring goes, your individual card utilization would remain the same (under 68.9%), and your overall utilization is going to remain the same. One less card with a positive balance may or may not give you a few points on some scores.

 

By the way, 68% utilization is nowhere near AZEO. Smiley Happy AZEO requires a tiny balance.

Message 5 of 8
SouthJamaica
Super Contributor

Re: Balance Transfer Dilemma


@whocares wrote:

I've got a couple credit cards that have the following utilization and newly approved card with a 0% offer:
Card 1 - $4k/$6k = 67% utilization  | 21% APR = $77/mo interest
Card 2 - $7k/$12k = 58% utilization  | 18% APR = $117/mo interest

New Card 3 - $0/$16k with 0% interest for 18 mo w/ 3% balance transfer fee

 

My question is which option is better from a FICO score & financial perspective?
A)  Transfer all balances ($11k) to Card 3 and incur a $330 balance transfer fee while saving on monthly interest ($194/mo) over the long term.  This would put the utlization for Card 3 at 68% ($11k/$16k)

Card 1 - $0k/$6k = 0% utilization  | 21% APR 
Card 2 - $0k/$12k = 0% utilization  | 18% APR

New Card 3 - $11/$16k = 68% utilization | 0% APR for 18 mo | Balance transfer fee $330 (3%)

B)  Transfer PART of the balances on Card 1/2 to get them under 30% each to Card 3.

Card 1 - $2070/$6k = 30% utilization  | 21% APR = $37/mo interest | Transferred $1930 to Card 3
Card 2 - $3600k/$12k = 30% utilization  | 18% APR) = $48/mo interest | Transferred $3400 to Card 3

New Card 3 - $5330/$16k = 33% utilization | 0% APR for 18 mo | Balance transfer fee $160 (3%)

 

I plan on paying at least $1k/mo until cards are paid-in-full (approx 1 year).  Is it better from a FICO scoring perspective to "spread" the balances across multiple cards to try and keep the utilization on each under 30% or is it better to have a high utilization/balance on 1 card and have a $0 balance on the other 2?

 

Looking for feedback/experience.  Thanks!


1. From a FICO 8 perspective I think your scores would be best served by having each of the 3 cards report at 28% or less.

 

2. From a mortgage score perspective I think your scores would best be served by transferring both balances in their entirety.

 

3. From an economic perspective... I hate paying balance transfer fees. Just sayin'.


Total revolving limits 653000 (575000 reporting) FICO 8: EQ 716 TU 747 EX 715

Message 6 of 8
Kforce
Valued Contributor

Re: Balance Transfer Dilemma

I would not worry about scores

You scores will only be down a short time no matter how you pay.

 

The  0% for 3% Fee @ 18-months cost you $330.

With 1000/mo -  split $880 & $120 then at 5 months full $1000 on 18% card, cost you $1070.

You save $740 using the BT.

 

FNBO Cashback Visa (20k) / Bank-West Cashback MC (20k) / USAlliance 3% Visa (20k)
Two Old CU cards (20k each) -- (Sock Drawer) / Secret 3% MC (20k)
Ficos : 830 / AAoA : 9 yrs / AoOA : 24 Yrs / AoYA : 0
Message 7 of 8
Kforce
Valued Contributor

Re: Balance Transfer Dilemma


@SouthJamaica wrote:


1. From a FICO 8 perspective I think your scores would be best served by having each of the 3 cards report at 28% or less.

2. From a mortgage score perspective I think your scores would best be served by transferring both balances in their entirety.

3. From an economic perspective... I hate paying balance transfer fees. Just sayin'.


Agree with #1 & #2, however for #3 there is still money to be saved with the BT.

It really just depends on if you need to worry about your score or not in the next 6 months.

FNBO Cashback Visa (20k) / Bank-West Cashback MC (20k) / USAlliance 3% Visa (20k)
Two Old CU cards (20k each) -- (Sock Drawer) / Secret 3% MC (20k)
Ficos : 830 / AAoA : 9 yrs / AoOA : 24 Yrs / AoYA : 0
Message 8 of 8
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