Planning on making a $13.5k purchase. How should I go about putting it on credit?

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guitarlifter
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Planning on making a $13.5k purchase. How should I go about putting it on credit?

Postby guitarlifter » Sun Apr 13, 2014 4:31 pm

Ok, so I am making a rather large purchase for a high-end musical instrument that is being hand-built. The total cost will be about $13.5k. I've paid off $2,560 of it thus far, leaving me with about $10,940 left needing to be paid. The person building this instrument is a one-man crew who has me on a 2-year+ waiting list due to how long it takes him to get to each customer. My time is getting closer to being up (signed up May 2012), but my instrument has still not been built yet. I might receive the instrument in June. I might receive it in December or even later. I am not sure yet because I have not spoken with the guy in 9 months (it's not good to email the guy every day for two years after all :ppp ). I just emailed him last night, so I will get a better idea of when the instrument will be done. He told me from the beginning that the 2-year wait was an estimate since it's so difficult to give an exact estimate as to how long it will take to get to my build since he is doing all of the work himself. The fact that he hasn't emailed me yet tells me that I have at bare minimum 2 months since that's how long it takes him at the bare minimum to make the instrument.

Meanwhile, I am attempting to prepare to pay for this instrument. There's a good chance I won't be able to pay it off without a running balance of some amount by the time he will be finishing it. I will, therefore, have to find the best way to go about paying off this instrument.

I have 6 or 7 years of credit history due to some student loans that were taken out in the summer of 2007 for college.

Here are my credit/charge cards:


Amazon Store card - $400 (Dec 30th, 2011)
Kohl's - $300 (Dec 31st, 2011)
American Eagle - $300 (Mar 27th, 2013)
PNC CashBuilder - $1,000 (Feb 9th, 2014)
PayPal Extras MC - $3,000 (Feb 14th, 2014)
BoA Cash Rewards - $5,000 (Feb 18th, 2014)
Chase Freedom - $1,200 (Feb 18th, 2014)
2nd Amazon Store card (didn't know the first one was still open) - $2,200 (Feb 23rd, 2014)
Sallie Mae MC - $1,000 (Feb 25th, 2014)
Discover It - $3,800 (Apr 2014)
Fidelity Investment Rewards Amex - $5,000 (Apr 2014)

= $23,200 in total credit (how I got approved for 8 lines of credit in 60 days despite only owning store cards before and having $31,500 in untouched, deferred school loans, I will never know :cool :)

Average account age is 2 years, 4 months due to my school loans (thank God for those)

My FICO according to the recent report I got from Discover upon being accepted last week was 744. No major delinquencies ever. I am 24 years-old.

My plan is the following:

1. Apply for one or more credit cards that offer 0% APR for 12-18 months. The higher the credit limit, the better, so I might go after cards whose credit lenders are known to be more generous with their credit limits. BoA seems to really like me a lot (both of my highest limit cards, $5,000, are from them), so I might go after them.

2. Ask for credit limit increases on all of my cards so as to increase my overall credit limit so that, when I do put this large purchase on my card(s), my overall utilization % will be less and, therefore, hurt my credit score less. I heard that getting your overall utilization under 30% is the magic number. I've already done the math, and I will need at least $36.5k for my total credit limit between all of my cards if I want to stay under 30%, and really I will probably want at least ~$40k for a total credit limit between all of my cards so that I can make other purchases and still stay below 30%.

3. Put the purchase on one or more credit cards that have 0% APR for at least a year and pay off the purchase in full before the 0% APR ends.

So what I am asking from you guys is:

1. Judging me from purchasing a $13.5k musical instrument aside, how does my plan look in terms of feasibly carrying it out without murdering my credit score or taking on any interest (so long as I pay the purchase off before the 0% APR ends)? What would you change?

2. Which cards should I go after based on the prerequisites I gave above? Yes, I know that there's a page that shows all 0% APR cards, but some of you have specific experience with these banks that will give me insight as to which ones to go for. City Simplicity looks good with its 18 months 0% APR.

3. Should I spread the multiple-thousand charge to a few cards in order for it to have the least impact on my credit score? Or is using one card fine if I can manage getting it all on one card even if it is near maxed out? The reason why I ask this is because I heard that it's not good to have ANY card above 30% utilization even if your overall utilization is below 30%. Which is it? Does it matter if your utilization of your credit limit on ANY card is over 30%? Or can I have one card over 30% as long as my overall utilization is under 30%? If it's the latter where only my overall utilization of all my cards matters, then this is why I will be wanting to get as high of a total credit limit as possible by asking for credit limit increases on all of my cards.

4. How long from the day of opening any of my credit accounts should I wait to apply for credit limit increases? 60 days? 90 days? 6 months? How should I go about it? Online? Phone? I think by phone would be best because I feel like talking to a real person would give me a higher chance of being approved for higher limits. Any good "reasons" (true or not) that I should throw at them to help convince them to increase my limits?

5. What else can I do to make things flow as smoothly as possible?

One more thing. The builder of my instrument told me I can delay the process of building the instrument by about 6 months if I wish to do so, so that might give me more time if I need it to either pay it off in full before he completes it or so that I can prepare my credit situation in order to take on the purchase without interest or killing my credit score.

Oh, and I might also be getting a promotion within the next 2-4 months that will over double my current income if it happens. That would potentially make it easy to get higher credit limits.

Thanks in advance for any help anyone offers me. I know this is a complex situation.
Whats's in the wallet: Discover It - $3,800 (5% rotating, ShopDiscover), Sallie Mae Rewards MC - $1,000 (5% on gas, groceries, and Amazon), Chase Freedom Visa - $1,200 (5% rotating + 10% extra w/ Chase Total Checking), PayPal Extras MC (1.66% on PayPal, 2.5% on Restaurants- $3,000, Bank of America Cash Rewards Visa Signature - $5,000 (Signature benefits), PNC CashBuilder Visa - $1,000 (Don't use), Fidelity Investment Rewards Amex - $5,000 (2% on everything)

. . . and some store credit/charge cards.

Future cards:

-US Bank Cash+ (for the 5% categories)
-1-2 0% APR cards for some big purchases I'll be making within the year


MemberSince99
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Postby MemberSince99 » Sun Apr 13, 2014 6:36 pm

Well putting that on what you have now is obviously going to boost your utilization which is going to drop your score. No way around that.


The problem with trying to get a card with a high limit to put it all on is your current high limit is 5k. And you just basically got 8 cards this year. So I'm having a hell of a time thinking of anyone realistically who is going to approve you for a 10k plus limit card right now with 0% over a long period of time. I also don't see you getting massive CLIs (if anything at all) on the cards you just opened.


I think your best bet is to just lay low for now. Consider that lenders are going to see you opened 8 cards this year. That might concern some (others won't care) but if they see your utilization suddenly shoot up to about 50% that could well set off alarms. I'm as guilty as you of opening new accounts recently as you can see in my signature, however my utilization is also under 1% (so it's considered 1%) which isn't going to freak anyone out. 50% could well be another story.


Worst case scenario, they start balance chasing or closing you out. That's absolute worst case. Maybe you'd be fine.


I'd consider what other routes I could take to do this. Do you have things you could sell to raise some cash? Could you do a personal loan or go another route to get some of the money? If you could say come up with 5k other ways even and just put 5k across a couple of your cards and pay them down fairly soon, I think you could escape without damage (minus short term hits to your score which won't matter as long as you aren't doing anything else which I'm sure you won't be).


Just some things to think about here.

whit
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Postby whit » Sun Apr 13, 2014 6:54 pm

The thing I am wondering is, because he is a one man crew; and the time frame in which he gets paid (in 2 years)

Would he even accept credit cards?

guitarlifter
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Postby guitarlifter » Sun Apr 13, 2014 7:16 pm

MemberSince99 wrote:Well putting that on what you have now is obviously going to boost your utilization which is going to drop your score. No way around that.


The problem with trying to get a card with a high limit to put it all on is your current high limit is 5k. And you just basically got 8 cards this year. So I'm having a hell of a time thinking of anyone realistically who is going to approve you for a 10k plus limit card right now with 0% over a long period of time. I also don't see you getting massive CLIs (if anything at all) on the cards you just opened.


I think your best bet is to just lay low for now. Consider that lenders are going to see you opened 8 cards this year. That might concern some (others won't care) but if they see your utilization suddenly shoot up to about 50% that could well set off alarms. I'm as guilty as you of opening new accounts recently as you can see in my signature, however my utilization is also under 1% (so it's considered 1%) which isn't going to freak anyone out. 50% could well be another story.


Worst case scenario, they start balance chasing or closing you out. That's absolute worst case. Maybe you'd be fine.


I'd consider what other routes I could take to do this. Do you have things you could sell to raise some cash? Could you do a personal loan or go another route to get some of the money? If you could say come up with 5k other ways even and just put 5k across a couple of your cards and pay them down fairly soon, I think you could escape without damage (minus short term hits to your score which won't matter as long as you aren't doing anything else which I'm sure you won't be).


Just some things to think about here.


First off, thanks for the nice response. :)

The good thing is that I have some time to work this situation out. Like I said, it's 2-3 months for him to build an instrument (he works on several at one time), but I doubt he's going to email me back and be like, "yep, let's do this!" I have a feeling it's still going to be a while. He still has to buy the rare woods he'll be using for it, and he hasn't done that yet, which takes time and careful selection. It could be another 6 months to a year or maybe even longer if I ask him to delay the building process and just focus on his other customers first if I wish. But then I risk him increasing the price of the instrument since he is becoming more prestigious and is therefore increasing his prices over the years. That's one reason why I'd to not delay the building process if possible.

The $10.9k is the absolute most I'd be putting on card. I don't plan on putting that much on. I plan on paying off as much as I can before putting the rest on card. Well, I'll probably put the whole 10.9k on card, but just put as much as I can pay off in the first month on the Fidelity (for the 2%) to avoid interest, then put the rest on a 0% interest card(s). Getting two ~3-5k 0% APR cards should be all I need at worst if I can't get one 10k 0% APR card. Two cards might be more reasonable since I wouldn't need as high of a credit limit.

I might actually already have a 0% interest card and not know it (although they might not be of much use by the time I charge for the instrument). I didn't look at my APRs too closely originally because I wasn't thinking of carrying a balance. But it looks like some of my cards offer 0% APR for a time on some of the offers out there. I might have signed up for that offer, but I'm not sure. I'll have to do some research on all of my APRs on my current cards.

Anyhow, I should have time to lay low for a while. I can chill out for 6 months to a year and then apply for those other cards that have 0% APR and just garden until then. I'm thinking it would also be a good idea to try to nab any last credit cards I might want (US Bank Cash+ comes to mind) before charging for that instrument because I suspect my ability to be approved for credit will plummet after I increase my utilization ratio to around 25-50% (hopefully I can get some credit limit increases so I can stay below 30%).

As for the credit limit increases, I will probably call each bank and ask for credit limit increases. I'll first call BoA and see if they'll up me to $10,000+ for my Fidelity and Cash Rewards cards and take whatever I can get. Then I will use those cards as leverage to hopefully have other banks match the credit limit of those cards. So, for example, if I can somehow by the grace of God get BoA to approve me for $10k, I will call my other companies and say, "well BoA has me at 10k credit limit on 2 cards. Can't you match that? I use them more because of that." They probably won't match 100%, but I'm sure it would help. I know GE is pretty generous, and I know that BoA likes me. They gave me their best terms. For my BoA cards, I'll probably call the FIA card services Spanish line since those people seemed especially generous and flexible. If I can get that promotion at work (which I have a good chance of getting), I think getting credit limit increases in a few months will be cake since my salary will over double.

I do sales, so I can be persuasive at times. :)

Oh, and trust me, I'm selling all kinds of stuff. I basically have like a small eBay business now. :) I have been buying and reselling things for higher value. Most recently, I bought a bunch of shoes that were $20 on Amazon and sold them for $50 a piece. I do have some pretty valuable sound equipment I could sell, but I'd prefer not to because that's like selling off your hair to buy a hairbrush.

But yeah, I don't plan on taking on any other large purchases other than this one, and I've been basically treating my credit cards like debit cards by paying off the cards weekly or sometimes even more often. My utilization is only a few % right now as it is and rarely has been over 10% if ever except maybe initially. Meh, I might as well say that it's a guitar I'm getting, btw. I don't like the idea of loans because who is going to approve a loan for a guitar? Credit companies don't care what it's for. Plus the 0% APR for 12-18 months could allow me to get away without paying any interest so long as I pay it all off in time.

Oh, and would CC companies really be balance chasing me so long as I'm paying at least the minimum (which I plan on paying substantially more than that)?

Long story short, I plan on laying low for 6-12 months by gardening (which I already have good to excellent credit), then apply for one or more 0% APR cards until I get enough credit on those cards to buy my instrument. Meanwhile, after a period of time, I'll apply for credit limit increases once I'm allowed to do so for each card and scrap for what increases I can get so as to increase my overall limit. Then I'll buy the instrument and pay the damn thing off before the 0% APR runs out while not taking TOO much of a hit to my credit score.

whit wrote:The thing I am wondering is, because he is a one man crew; and the time frame in which he gets paid (in 2 years)

Would he even accept credit cards?


Yes, he has told me he does and that I can put the remaining balance on cards.

He just basically expects to get paid once he is done building the guitar and before it ships out to me. I have a while before I will be getting it though. From my interactions with him over the past two years, he has seemed like he was always behind schedule, which will probably work in my favor.
Whats's in the wallet: Discover It - $3,800 (5% rotating, ShopDiscover), Sallie Mae Rewards MC - $1,000 (5% on gas, groceries, and Amazon), Chase Freedom Visa - $1,200 (5% rotating + 10% extra w/ Chase Total Checking), PayPal Extras MC (1.66% on PayPal, 2.5% on Restaurants- $3,000, Bank of America Cash Rewards Visa Signature - $5,000 (Signature benefits), PNC CashBuilder Visa - $1,000 (Don't use), Fidelity Investment Rewards Amex - $5,000 (2% on everything)



. . . and some store credit/charge cards.



Future cards:



-US Bank Cash+ (for the 5% categories)

-1-2 0% APR cards for some big purchases I'll be making within the year

linuxmachine
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Postby linuxmachine » Sun Apr 13, 2014 9:06 pm

I'd apply for a 0% interest, BT free card around when you expect to pay. I'm assuming you won't be paying till next year anyways, so you got plenty of time to garden AND increase your income. I wouldn't bother with CLI's unless the bank is known to be generous.

guitarlifter
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Postby guitarlifter » Sun Apr 13, 2014 11:00 pm

I'd imagine that I'd want to wait as long as possible before applying for these 0% APR cards, then app for multiple 0% APR cards all on the same day so as to have the highest chance of being accepted. Up until the point of purchasing this guitar, my credit should look great in 6-12 months of gardening if it's already floating around 750 as it is. If I can keep my FICO above 700 throughout this process, I'd be a happy camper.
Whats's in the wallet: Discover It - $3,800 (5% rotating, ShopDiscover), Sallie Mae Rewards MC - $1,000 (5% on gas, groceries, and Amazon), Chase Freedom Visa - $1,200 (5% rotating + 10% extra w/ Chase Total Checking), PayPal Extras MC (1.66% on PayPal, 2.5% on Restaurants- $3,000, Bank of America Cash Rewards Visa Signature - $5,000 (Signature benefits), PNC CashBuilder Visa - $1,000 (Don't use), Fidelity Investment Rewards Amex - $5,000 (2% on everything)



. . . and some store credit/charge cards.



Future cards:



-US Bank Cash+ (for the 5% categories)

-1-2 0% APR cards for some big purchases I'll be making within the year

linuxmachine
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Postby linuxmachine » Sun Apr 13, 2014 11:07 pm

guitarlifter wrote:I'd imagine that I'd want to wait as long as possible before applying for these 0% APR cards, then app for multiple 0% APR cards all on the same day so as to have the highest chance of being accepted. Up until the point of purchasing this guitar, my credit should look great in 6-12 months of gardening if it's already floating around 750 as it is. If I can keep my FICO above 700 throughout this process, I'd be a happy camper.


Well unless you are looking for another loan it doesn't matter. Your util will eventually go down after putting 10k on your cards and your score will be back to the upper 700's soon.

guitarlifter
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Postby guitarlifter » Mon Apr 14, 2014 12:07 am

linuxmachine wrote:Well unless you are looking for another loan it doesn't matter. Your util will eventually go down after putting 10k on your cards and your score will be back to the upper 700's soon.


That's true. And again, the 10k is the worst-case scenario. I'm hoping to cut that by at least a few thousand or more by the time I actually will need to put it on card. I guess a temporary dip in credit score won't be too bad. Sometime in July, I will probably call every one of my credit card's banks and ask for credit limit increases and see if that flies with any of them.
Whats's in the wallet: Discover It - $3,800 (5% rotating, ShopDiscover), Sallie Mae Rewards MC - $1,000 (5% on gas, groceries, and Amazon), Chase Freedom Visa - $1,200 (5% rotating + 10% extra w/ Chase Total Checking), PayPal Extras MC (1.66% on PayPal, 2.5% on Restaurants- $3,000, Bank of America Cash Rewards Visa Signature - $5,000 (Signature benefits), PNC CashBuilder Visa - $1,000 (Don't use), Fidelity Investment Rewards Amex - $5,000 (2% on everything)



. . . and some store credit/charge cards.



Future cards:



-US Bank Cash+ (for the 5% categories)

-1-2 0% APR cards for some big purchases I'll be making within the year

takeshi
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Postby takeshi » Mon Apr 14, 2014 8:16 am

guitarlifter wrote:The reason why I ask this is because I heard that it's not good to have ANY card above 30% utilization even if your overall utilization is below 30%. Which is it?

Both individual and overall utilization matter.

guitarlifter wrote: How long from the day of opening any of my credit accounts should I wait to apply for credit limit increases?

Depends on the creditor. They don't all handle CLI's identically.

guitarlifter
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Postby guitarlifter » Mon Apr 14, 2014 6:28 pm

takeshi wrote:Both individual and overall utilization matter.


Depends on the creditor. They don't all handle CLI's identically.


I figured as much. I won't be able to do much about having one or two credit cards maxed out. That will most likely happen for a while at least. However, I can still potentially make my credit limit much higher over the next 6 months.

Btw guys, I have some more news. It sounds like my guitar maker is closer to being ready than I thought.

We are definitely getting close to starting. I do have an excellent set of Blackwood picked out for you and a bunch of excellent Blue Spruce.

I have a busy week and then out of town for a long weekend so let's plan on discussing the build in a couple weeks.


That's what he most recently said to me in an email I got this morning. I have a feeling that my guitar would be delivered between June and August if I did not ask for a delay in the building process, so I emailed him back, asking him to delay the start of building my guitar by six months like he said I could. This delay should now place the time that I would need to pay for the guitar around the end of the year or the beginning of next year.

After doing some reading, the longer I wait between credit card applications, the better, so I am going to wait a full 6 months before applying for any more credit cards, and then I'll apply for multiple ones at once. So sometime in October will be when I'll make my move. This will also be probably only a couple of months before I would be purchasing the guitar, so that's perfect.

Perhaps in 3 months, I will attempt to get credit limit increases on all of my current cards as well.
Whats's in the wallet: Discover It - $3,800 (5% rotating, ShopDiscover), Sallie Mae Rewards MC - $1,000 (5% on gas, groceries, and Amazon), Chase Freedom Visa - $1,200 (5% rotating + 10% extra w/ Chase Total Checking), PayPal Extras MC (1.66% on PayPal, 2.5% on Restaurants- $3,000, Bank of America Cash Rewards Visa Signature - $5,000 (Signature benefits), PNC CashBuilder Visa - $1,000 (Don't use), Fidelity Investment Rewards Amex - $5,000 (2% on everything)



. . . and some store credit/charge cards.



Future cards:



-US Bank Cash+ (for the 5% categories)

-1-2 0% APR cards for some big purchases I'll be making within the year



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