My husband and I have two CC's. One with a high balance but very low rate (less than 6%), and the other, a low balance and high rate (19.99%). I would like to apply for a new CC from USAA to see if we can get another lower rate card than the 19.99% and transfer the balance over. We are trying to pay off this higher rate card first and hoping that a new card w/ lower might help us get there faster. But how much will that affect my score if we apply, and get a new CC? Should we close the old card once the balance was transferred over or leave it open (and not use)?
In the fall we hope to refi our fixed rate mortgage if rates drop and are looking at possibly buying a new auto as well,
Any suggestions?
Thanks 
4ABlueOcean wrote:
My husband and I have two CC's. One with a high balance but very low rate (less than 6%), and the other, a low balance and high rate (19.99%). I would like to apply for a new CC from USAA to see if we can get another lower rate card than the 19.99% and transfer the balance over. We are trying to pay off this higher rate card first and hoping that a new card w/ lower might help us get there faster. But how much will that affect my score if we apply, and get a new CC? Should we close the old card once the balance was transferred over or leave it open (and not use)?
In the fall we hope to refi our fixed rate mortgage if rates drop and are looking at possibly buying a new auto as well,
Any suggestions?
Thanks
(emphasis mine)
I'm a little confused on the sequence here. You'd like to get a new card and transfer the balance over from the 19.99% rate card. But then it says "We are trying to pay off this higher rate card first" but you are "hoping that a new card w/ lower (fate) might help us get there faster."
If you qualify for a new card with a lower rate, the credit limit on the new card will be added to your total credit limit, and your overall util (utilization; amount owed divided by credit limit) should drop, which is good. If it drops enough, it will help your score. But there is also a score drop (typically 5-10 points) for the inquiry and the new account, and if your AAoA (average age of accounts) drops to a lower year, you can lose points for that, too. If you only have two cards (whose name are they in?), there might not be a score penalty for adding a card.
My suggestion would be that you first pay off the small, higher-APR balance and then get the lower-APR balance down to 49% of its credit limit at the most, and preferably down to 9% or less. USAA is a pretty conservative bank, and all banks know the BT (balance transfer) game. They often play it themselves to attract new customers, but moving debt around as opposed to paying it off isn't the smart move. Reducing your debt will help your scores (without the potential damage from a new account) and will also make you look like a better risk to future lenders.
Don't close a card unless there are recurring fees.
And finally, conventional wisdom says not to open a new credit account within 6 months of applying for a mortgage. How true this is, I don't know, but you'll certainly see this repeated all over the forums.
If you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)
These will give you the background knowledge you need to understand what you read here on the forums.
Thanks for the reply. Yes, I did sound confusing, didnt I?
My thought was that maybe we could stand to have another credit card in our mix. I figured if we could get a card with a rate lower than 19.99% from USAA, why not transfer the balance? Our goal has been to pay the card with the high rate & low balance paid off first, and within the next 12-15 months. But why keep paying a 19.99% rate when I could be paying possibly lower rate over the next 12-15 months? It is not our goal to move balances around but rather to pay down the highest rate first. We've been using the push payment method which has been great strategy for us. Both these cards are in my hubby's name and I am authorized user on one (not joint accts). Will keep that 19.99% card open regardless.
Doing a refi on our mortgage this fall/winter IS our priority if rates come back to 5.0% (or hopefully below). Sounds like we should just wait on adding a new card just to be on the safe side. Want to make sure our scores are as high as possible. The last time our scores were pulled (in May), his TU was 720 and mine was 680. Since then, we have had anything negative on our CR removed. I imagine my score will come back over 700 again, and hubby's will come up once the utilization improves on these two cards.
I have done much reading to try to understand the basics of scoring but am a little fuzzy on how utilization is calculated. For scoring purposes, is utilization factored with the total credit available & balance from all CC's one holds, or do they factor utilization for each CC seperatly? And how about charge accounts? Should I factor this in too? I understand that CC's seem to carry more with that Charge Accts.
We are going to hold off on the auto loan till next year now too. We thought the Cash for Clunkers program might be helpful for us but the vehicle we want to trade does not have crummy enough mileage.
Thanks for your advice!!!!