Balance Transfer

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frogman12
 
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Balance Transfer

Postby frogman12 » Sun Aug 14, 2016 11:43 am

My cousin has a card that has a balance on it and would like to transfer that balance to a new card with a 0% apr for 21 months. His current card has a $15,000 limit on it. His concern is that he may not be approved for the full amount needed if he transfers. This will leave him with his old card with a high interest rate 14% and then the new one with 0%. He would rather not have 2 cards because it would be best if the entire balance would be transfered to one card.

My question is... Do you think its best for him to apply for the Card to see what limit it allows him to have and then do the transfer or apply for the transfer upfront and he takes what he gets?

I'm thinking if he apply's for the card that offers 0% including (0% balance transfers up to 4 months) and not mention that he wants to transfer the old one into the new one that new card company may offer him a higher credit limit because its not related to a transfer even though they give the option. If this is the case then after he is approved he can then transfer the a greater amount of the old card to the new one with 0% interest.


Hope that makes sense or better yet helps him save cents! Sorry about the bad pun!

Any help would be appreciated.


Tubpbs
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Re: Balance Transfer

Postby Tubpbs » Sun Aug 14, 2016 5:12 pm

His credit limit is $15,000?

What balance is being carried on the card?
Depending on the portion of his overall limit, approval for anything may be unlikely.
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frogman12
 
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Re: Balance Transfer

Postby frogman12 » Sun Aug 14, 2016 6:16 pm

The balance is 14,500.00

kdm31091
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Re: Balance Transfer

Postby kdm31091 » Sun Aug 14, 2016 6:38 pm

I don't think it matters whether you request the transfer during the card application or later. I think it's just urban legend that it can impact the starting limit. You'll get the limit you qualify for.

In any event, if the balance on the existing card is substantial, you'll have trouble getting approved for a new card with a decent limit. Unfortunately, the best time to get high limit cards is when you don't need them.

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Re: Balance Transfer

Postby yfan » Sun Aug 14, 2016 10:42 pm

frogman12 wrote:The balance is 14,500.00

And how much, if any, of this amount can your cousin pay off immediately? After all, the point of 0% cards isn't to continue to carry debt by transferring from one card to another but rather to take advantage of the period while you hold onto the full amount in liquid cash and earn interest and then pay it off in a lump sum as soon as the period ends.

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PhillyPhoto
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Re: Balance Transfer

Postby PhillyPhoto » Mon Aug 15, 2016 7:46 am

frogman12 wrote:The balance is 14,500.00

$14,500/15,000=96% utilization. It's highly doubtful he'll get a limit of equal or greater than what he has already, especially considering it's his only credit card. 33% is the preferred util, and 20% or less is optimal. If he wants to stick with 1 credit card, he needs to focus on bringing the balance down, and a transfer is highly doubtful at this point. If he does get the other card and maxes it out with the BT and fees, then he's paying 2 credit cards, and when the 4 months are up, interest on both as well.
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takeshi
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Re: Balance Transfer

Postby takeshi » Mon Aug 15, 2016 8:06 am

frogman12 wrote:His concern is that he may not be approved for the full amount needed if he transfers.

One has nothing to do with the other. The limit he qualifies for will depend on credit profile and income. Transfer amount is irrelevant.

The reason I'd recommend not transferring during the application process is that you don't know for certain what the limit will be on the new card. Revolving utilization always matters so you want to carefully consider what the revolving utilization will be on the new card after transfer.

frogman12 wrote:His current card has a $15,000 limit on it.

What's the balance and revolving utilization on it? That will have an impact as well as everything else in his credit profile. If revolving utilization is high then don't count on a new credit account as a solution. Even if approved, high revolving utilization can lead to low limits. Been there, done that and learned the hard way myself. If he's in that boat then he just needs to pay down his balance(s) and get rid of his revolving debt.

frogman12 wrote:I'm thinking if he apply's for the card that offers 0% including (0% balance transfers up to 4 months) and not mention that he wants to transfer the old one into the new one that new card company may offer him a higher credit limit because its not related to a transfer even though they give the option. If this is the case then after he is approved he can then transfer the a greater amount of the old card to the new one with 0% interest.


Hope that makes sense or better yet helps him save cents! Sorry about the bad pun!

The question makes sense. The reasoning doesn't, Again the requested transfer amount is irrelevant as far as what limit he will qualify for. Limit is determined based on credit profile and income. If you want our feedback we need a much better idea of his credit profile. Does he only have 1 credit card. Does he have any other credit accounts on his credit reports? What's his revolving utilization? What's his Average Age of Accounts? How many accounts that are 2 years or less does he have?

frogman12 wrote:The balance is 14,500.00

$14,500 / $15.000 is 97% Anything 90% or over is maxed. Consider that 30% is the generally suggested maximum. Not ideal, maximum as in "do not exceed". Ideal is much lower than 30%. Forget relying on a new card.

This is only anecdotal but back when I was over 60% (quite a bit lower than 97%) I figured a BT card would help so I applied for one. I was approved but I received a $2K limit which was useless even if I maxed the card which would be a bad idea. Only 6 months later I got my revolving utilization under 10%. There were no other changes to my reports. I applied for a new card with the same creditor and was instantly approved for $25K. The next day I applied for another card with the same creditor and was also approved for $25K on that card. I'm not saying that your brother would qualify for such limits if he got his revolving utilization down. I don't know anything about his credit profile. I'm just using this as an example of how much high revolving utilization can constrict the limit that qualifies for even with a credit profile in otherwise excellent shape.

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Re: Balance Transfer

Postby kdm31091 » Mon Aug 15, 2016 9:04 am

Unfortunately with that utilization you will not be looking at approval for a new card. Your only real option is to just pay down the card.



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