Paying Off a Balance Transfer on a Credit Card
Author: scarymary
Posted: Thu Nov 17, 2005 1:08 pm
Post subject: To pay or not to pay...
Hi all!
I just got a BT check from Capital One for $5000 and deposited it in my checking account. It was the only way they would give me a credit line increase... to take a check... Anyway, I want to pay them the $5k right back because I only took the money to get the increase, SO...
I have a $2700 balance I was carrying + the $5k check gives me a balance of $7700 with a CL of $8800 which is 87.5% utilization and just the fact that I know that is making me insane.
My question is...
When should I pay them? Now? or wait until my statement due date which is December 14th? (I JUST paid them on the 14th of Nov and their check didn't clear yet in my account so I just paid a regular payment).
What's the better thing to do?
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Author: Andri
Posted: Thu Nov 17, 2005 2:37 pm
Post subject:
I would guess that depends on what interest rate you balance is at and how you feel about paying interest on the $5,000 versus getting the higher reported limit on the Cap One card. From what i have heard, Cap One does not report actual limits, so by default your high balance is reported as your limit.
Since you alredy have a blance, you will probably start accruing interest on the $5000 as soon as your bank clears the check from Cap One at the latest, maybe as soon as the date Cap One wrote the check to you. If you wait to pay, that means you will be paying more interest. However if you pay right away, although you will still have a higher limit, you won't change the high balance reported on your CR since your balance will be back down to the original $2700, so you reported utiliation will still probably be high even though your actual utilzation is not.
If you are concerned about the utilization reflected on your CR and as long as your interest is at a bearable rate, I would probably send payment so it gets there a a couple days after your statement closing to minimize interest charges while still getting the higher balance reported.
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Author: Ira
Posted: Thu Nov 17, 2005 4:59 pm
Post subject: Paying Off a Balance Transfer on a Credit Card
Ok, what is the finance charge rate on the balance transfer? What is the rate on your purchase balance? Your repayment will be credited to the lower rated balance first. For instance, say you got a 0% rate on your balance transfer and your purchase rate is 9.9%. Your repayment will go to the 0% balance first. In your case that might not matter since you'll be paying the entire balance transfer amount.
When to pay? immediately if not sooner if you want to avoid finance charges, since there is no grace period on balance transfers.
I'm curious why the utilization rate is a concern. This is one of those things that goes up and down likie a yoyo and it's not going to negatively affect you in the short term. Remember, do NOT be a credit score junkie.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Thu Nov 17, 2005 1:08 pm
Post subject: To pay or not to pay...
Hi all!
I just got a BT check from Capital One for $5000 and deposited it in my checking account. It was the only way they would give me a credit line increase... to take a check... Anyway, I want to pay them the $5k right back because I only took the money to get the increase, SO...
I have a $2700 balance I was carrying + the $5k check gives me a balance of $7700 with a CL of $8800 which is 87.5% utilization and just the fact that I know that is making me insane.
My question is...
When should I pay them? Now? or wait until my statement due date which is December 14th? (I JUST paid them on the 14th of Nov and their check didn't clear yet in my account so I just paid a regular payment).
What's the better thing to do?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Andri
Posted: Thu Nov 17, 2005 2:37 pm
Post subject:
I would guess that depends on what interest rate you balance is at and how you feel about paying interest on the $5,000 versus getting the higher reported limit on the Cap One card. From what i have heard, Cap One does not report actual limits, so by default your high balance is reported as your limit.
Since you alredy have a blance, you will probably start accruing interest on the $5000 as soon as your bank clears the check from Cap One at the latest, maybe as soon as the date Cap One wrote the check to you. If you wait to pay, that means you will be paying more interest. However if you pay right away, although you will still have a higher limit, you won't change the high balance reported on your CR since your balance will be back down to the original $2700, so you reported utiliation will still probably be high even though your actual utilzation is not.
If you are concerned about the utilization reflected on your CR and as long as your interest is at a bearable rate, I would probably send payment so it gets there a a couple days after your statement closing to minimize interest charges while still getting the higher balance reported.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Ira
Posted: Thu Nov 17, 2005 4:59 pm
Post subject: Paying Off a Balance Transfer on a Credit Card
Ok, what is the finance charge rate on the balance transfer? What is the rate on your purchase balance? Your repayment will be credited to the lower rated balance first. For instance, say you got a 0% rate on your balance transfer and your purchase rate is 9.9%. Your repayment will go to the 0% balance first. In your case that might not matter since you'll be paying the entire balance transfer amount.
When to pay? immediately if not sooner if you want to avoid finance charges, since there is no grace period on balance transfers.
I'm curious why the utilization rate is a concern. This is one of those things that goes up and down likie a yoyo and it's not going to negatively affect you in the short term. Remember, do NOT be a credit score junkie.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 12:26 PM
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