Please help a newb trying to transfer a balance

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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docdaddy
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Please help a newb trying to transfer a balance

Postby docdaddy » Sat Sep 20, 2014 12:59 pm

OK - been doing some reading, hoping you guys with all the knowledge will be patient with a newbie here.

I've got a Discover with about $13,000 on it, 16.99% interest. Another card with about $9000 out 0f $10,000 limit, about 10.2% An amex with a balance (about $3000.) Income about $175,000, house payment about $1200. On my Discover statement it says my FICO is 735, and the things lowering it are several accounts with high balance/limit ratios.

I have a "prescreened" offer from Chase Slate for a card, after the intro the rate would be a percent higher than Discover (17.99 vs, 16.99 if they give me what is in the offer) 0% for 15 months on the balance, 0% transfer fees. Would love to start paying down that $13,000 with the boost of 0% interest. So two questions:

1. I see you guys talking about a "hard pull" when you apply. Just how bad a hit is that on your credit? I"d hate to call and apply and only get something like $5000 CL and decide to look elsewhere, i.e. turn it down, and get a hit of my credit rating just for checking.

2. I know it would be a guess, but what are the odds Chase Slate would give me a credit line high enough to transfer that entire $13,000 over?

3. Let's say they only give me, oh, $6000. Is my credit going to be hurt if I move $6000 of the Discover over and then have an additional card? My plan was to move it all then cancel the Discover - is that a bad idea credit score wise?

Thanks!


rockyrock
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Postby rockyrock » Sun Sep 21, 2014 1:39 am

Based off the info you provided, chances are you will get more than $6k--although don't quote me on that ;-)

If you get a card with a lower limit it will still improve your credit by effectively decreasing your overall utilization. Individual issuers may not like high utilization on one card but your score is impacted by your total utilization.

I wouldn't worry too much about the HP either. The impact will be minor and temporary.

One thing I would do is find another card or two (from other issuers) that are offering 0% intro offers. If you fail to get the desired limit on your first app you can apply for one or two others the same day. By doing it the same day you will avoid the hard pulls being identified and impacting your score. Do the apps close together if you take this route as the inquiries can appear on your report pretty fast.

Good luck and remember as always, YMMV.
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docdaddy
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Postby docdaddy » Sun Sep 21, 2014 9:23 am

Thanks - one thing I may be misinformed on - is your credit score hurt or helped by having more credit cards that have no balance? For example, we have a credit card from GE credit that we used for a no interest for 12 months purchase of an oven. Paid it off before the 12 months (as it had some crazy 25% interest rate or something.) We have no plans to use it, but will my credit score be hurt or helped if we cancel that card?

and in the same way, if we remove all our balance from our Discover (which has a crazy 16,000 limit) would we better keeping it, with a zero balance, or canceling it?

Thanks!

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Vattené
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Postby Vattené » Sun Sep 21, 2014 11:35 am

docdaddy wrote:1. I see you guys talking about a "hard pull" when you apply. Just how bad a hit is that on your credit? I"d hate to call and apply and only get something like $5000 CL and decide to look elsewhere, i.e. turn it down, and get a hit of my credit rating just for checking.

Hard pulls don't have a big impact on your credit, I wouldn't worry too much about it if I were you. They have a bigger impact on people establishing credit just because there is not as much other information in their profile. They will come into play if someone has a lot of inquiries, as it sets off a red flag that the borrower is desperate for credit. In your case, an additional few inquiries shouldn't hurt you too much. They do have a negative impact, but that may easily be outweighed (none of us can say for sure) by your improved utilization assuming you get approved.



docdaddy wrote:2. I know it would be a guess, but what are the odds Chase Slate would give me a credit line high enough to transfer that entire $13,000 over?

I agree with rockyrock, and would guess the odds are high given your current limits. I would think you'd easily be approved with a 735 FICO (according to Credit Karma the average approved score for the Slate is 646 and typical high [95th percentile] is 749 - not on FICO but on their CK model I assume - for whatever it is worth). If you get approved for a lower limit than you would like, you may be able to call and request a higher limit. I've never done this, but it would be worth a shot. Normally I doubt this would get you anywhere (you really have no bargaining power as a newly approved member), but if you explain you want to transfer more of a balance to your new card, it could help.



docdaddy wrote:3. Let's say they only give me, oh, $6000. Is my credit going to be hurt if I move $6000 of the Discover over and then have an additional card? My plan was to move it all then cancel the Discover - is that a bad idea credit score wise?

The additional card would likely help you because of your improved utilization. I am guessing with your balances and credit limits, you have a decent history. If you close the Discover it would reduce your total credit limit, which would lower your utilization. Keeping the Discover open and putting it in the sock drawer would be best for your score, but if you want to close it so you can't be tempted to use it and don't think you could resist if it was available to you, I would close it.



Your credit score has no practical use unless you are planning on applying for a loan soon. My philosophy is do what is best for you, manage your finances responsibly, and your credit score will improve over time. If you don't need a mortgage or other loan soon, you don't gain anything by worrying over every point you can get. Getting your credit card debt to a 0% card will save you money in interest, and, in my opinion, would be worth a dip in your credit score if you had to choose between the two. So I say go for it, and good luck!
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

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Vattené
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Postby Vattené » Sun Sep 21, 2014 11:46 am

Oops, I totally missed that you posted again! Excuse my long rant.

Your score is helped by keeping accounts open. Closing accounts has no impact on your average age of account, but they lower your total credit limit and therefore raise your utilization. Leaving an account open, however, does expose you to the risk of someone using it fraudulently without your knowledge. For some people, that risk is not worth leaving it open.

Personally, I have a short credit history. I need to keep those other factors as favorable as possible so I leave accounts open that I don't use. You have such high limits that you may not find it that useful to leave them open.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

takeshi
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Postby takeshi » Mon Sep 22, 2014 10:27 am

docdaddy wrote:I see you guys talking about a "hard pull" when you apply. Just how bad a hit is that on your credit?

The hard pull has some impact but it's not the only impact. New accounts reduce your AAoA as well.

docdaddy wrote:I"d hate to call and apply and only get something like $5000 CL and decide to look elsewhere

If anything your high utilization will be what restricts the limits and APR's that you can get.

docdaddy wrote:I know it would be a guess, but what are the odds Chase Slate would give me a credit line high enough to transfer that entire $13,000 over?

Even if they did you don't want to max out a card. Both individual and overall utilization matter.

As for odds, we can't tell you. You mention that you have $13K on your Discover but what is its limit? You have another card at 90% which isn't helping. What's the limit on your AmEx? We need the balance and the limit to determine utilization.

EDIT: I see the $16K for Discover in a later reply. 81% is very high. I'd say odds are poor with one account at 90% and another at 81%. At this stage, score is the least of your concerns. You need to reduce your debt and may want to check into a debt consolidation loan -- that is, if you can avoid racking up more credit card debt.

docdaddy wrote:Let's say they only give me, oh, $6000. Is my credit going to be hurt if I move $6000 of the Discover over and then have an additional card? My plan was to move it all then cancel the Discover - is that a bad idea credit score wise?

Again, all depends on utilization. If you get $6K and transfer $6K to it you have a maxed card which is detrimental. If you close your Discover you immediately affect your utilization since you lose some available credit and that's also detrimental to your score. You really need to look at your utilization before-and-after to have a better idea of the impact. Your posts are missing a lot of information for us to make such an assessment for you.

docdaddy wrote:Thanks - one thing I may be misinformed on - is your credit score hurt or helped by having more credit cards that have no balance?

If you want generalizations: Lower reported utilization (as long as it's above 0) is better. Fewer reporting balances is better.

Brad Bishop
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Postby Brad Bishop » Fri Oct 03, 2014 11:03 am

At $175K and $1200/mo house payment, it seems like, if you just tightened your belt, you could pay off those balances relatively quickly.

You could go for a 0% card with a balance transfer but these always seem like sucker cards to me. The game the card company is playing is:
- You're bad enough with debt to carry a balance that's big enough to where you'd want to transfer it
- You think, "0% for 18 months! How can I lose??"
- They're betting that you'll continue to be bad at debt and the 0% will give you enough breathing room to where you'll spend a little more on your new credit card and that amount won't be covered under the 0% rule and then they have a nice lucrative income from you with this ongoing debt. The interest rates on these types are cards is probably as bad or, more likely, worse than what you have right now.

They've done extensive research to figure this game out and the odds are in their favor.

To put the odds in your favor I'd suggest:
- just paying off the debt you have
- if you're being choked on this because of other expenses not listed here, then go to your bank or, hopefully credit union, and ask for a consolidation loan and move all, or as much of, this debt to that loan and just pay it off as quickly as possible.

Everything else is really just continuing the game and very likely going to make it worse on yourself.



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