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Smartest Balance Transfer Tips Needed

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Valued Member

Smartest Balance Transfer Tips Needed

Here is my situation:

I have 4 low limit credit cards all with pretty high balances.

Card 1- CL $800 Balance $660
Card 2- CL $700 Balance $572
Card 3- CL $500 Balance $369
Card 4- CL $300 Balance $139

I have just applied for and receive two cards: An AMEX Cash Magnet with a SL of $1000 and a Discover It with a SL of $2000. The AMEX is 0% for 18 months on purchases and BTs. The Discover has a 10.88% APR on BTs for 6 months.

My question is, what would be the best way for me to get my utilization numbers down? Is it better to just work hard on paying down the balances on these small cards or should I spread it out a bit by making some balance transfers and getting the utilization down on those cards but also putting some utilization on the new ones? Keep in mind, I would not transfer any amount that would put the new cards at or above 30%. But is having a balance on every card a bad thing too? What is my best option to maximize my FICO?
6 REPLIES 6
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Valued Contributor

Re: Smartest Balance Transfer Tips Needed

Card 1- CL $800 Balance $660 (82.5% - 49% = Pay $268)
Card 2- CL $700 Balance $572 (81.7%  - 49% = Pay $229)
Card 3- CL $500 Balance $369 (73.8% - 49% = Pay $124)
Card 4- CL $300 Balance $139 (46% = <49% Make regular payments)

 

$621 in BT will bring your utilization to below 50% overall.

To remain at 30% on the new cards you would have $900 available.

 

Is there a BT fee?

The next thing you need to do is develop a budget for yourself. This will help you to stop creating new debt. You are already aware of how easy it is to just put expenses on a credit card, and the balances can really add up!

 

In the grand scheme you have very little credit debt (don't know your income) and now is the perfect time to pay it down to zero. If you do, you can flip the script on credit cards and make them pay you to use them. The future you will thank you!

Message 2 of 7
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Valued Member

Re: Smartest Balance Transfer Tips Needed

Thank you so much for the response. First, are the amounts you mentioned what you suggest I transfer or just pay? I believe the BT fee is 3% on both cards. Is it bad to have a balance on all of my cards or is it ok as long as overal utilization is down?
Message 3 of 7
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Valued Contributor

Re: Smartest Balance Transfer Tips Needed

This almost an impossible question to answer. With your thin file (not many credit products) and short history score changes may be very dynamic.

 

The amounts posted are what it would take to pay each card to below 50% which should result in a score increase. As your new accounts report you will likely receive a score decrease. 6 months of reporting and the account is not considered new by some of the scoring models and you will hopefully see the rebound.

 

Over the years I have read on these forums that getting your utilization below 70%, 50%, 30% and 10% on your cards can result in a score increase with each level. With your current balances I aimed to get you below 50% on all cards. Your next milestone would be to get below 30% although I would pay down the highest interest rate to save the most money before going for the 30%.

Message 4 of 7
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Super Contributor

Re: Smartest Balance Transfer Tips Needed


@jnoir17 wrote:
Here is my situation:

I have 4 low limit credit cards all with pretty high balances.

Card 1- CL $800 Balance $660
Card 2- CL $700 Balance $572
Card 3- CL $500 Balance $369
Card 4- CL $300 Balance $139

I have just applied for and receive two cards: An AMEX Cash Magnet with a SL of $1000 and a Discover It with a SL of $2000. The AMEX is 0% for 18 months on purchases and BTs. The Discover has a 10.88% APR on BTs for 6 months.

My question is, what would be the best way for me to get my utilization numbers down? Is it better to just work hard on paying down the balances on these small cards or should I spread it out a bit by making some balance transfers and getting the utilization down on those cards but also putting some utilization on the new ones? Keep in mind, I would not transfer any amount that would put the new cards at or above 30%. But is having a balance on every card a bad thing too? What is my best option to maximize my FICO?

IHMO it's "better to just work hard on paying down the balances on these small cards". But if you can get a balance transfer with Amex or Discover which HAS NO BALANCE TRANSFER FEE, then it would be ok to transfer up to 28% of the limit on the card to which you're transferring the balance(s).


Total revolving limits 653000 (575000 reporting)

Message 5 of 7
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Valued Member

Re: Smartest Balance Transfer Tips Needed

Would transferring some of the balances not be worthwhile to get my individual utilization down on those cards that are in the 75-85% range? Even if there is a BT fee, it would be nominal since the amounts I would be transferring would be small. I just want to do whatever I can to get a score jump since I will probably take a hit for these two new accounts being opened.
Message 6 of 7
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Super Contributor

Re: Smartest Balance Transfer Tips Needed


@jnoir17 wrote:
Would transferring some of the balances not be worthwhile to get my individual utilization down on those cards that are in the 75-85% range? Even if there is a BT fee, it would be nominal since the amounts I would be transferring would be small. I just want to do whatever I can to get a score jump since I will probably take a hit for these two new accounts being opened.

If you don't mind paying the money, sure. Just be sure that the new transferred balance is 28% or less of the limit.


Total revolving limits 653000 (575000 reporting)

Message 7 of 7
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