How to Know if Credit Card Consolidation is The Best Option
Author: JoyJoy
Posted: Sun Aug 20, 2006 9:32 pm
Post subject: Wise decision or not?
I hope someone is up who can answer this question tonight for someone I know. I am not sure what to advise her to do!
Question: I have total credit card limits that equal to $36,642.00 on six cards. My total credit card debt is $11,500 to 12k. I have one card with a $15K credit limit that is empty and it has a 0% balance transfer offer until March, 2007. I want to consolidate all my 12K debt on just this one card. Is this a wise decision as I would then only have one card to pay each month? I may receive other 0% offers but I am not worried about it if I don't by March.
I will watch this post for answers. TY!
J~J
"You may never know what results come from your action. But if you do nothing, there will be no result." Mahatma Gandhi
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: mouse
Posted: Sun Aug 20, 2006 9:39 pm
Post subject: Re: Wise decision or not?
If it saves interest money it is a no brainer...DO IT
Author: JoyJoy
Posted: Sun Aug 20, 2006 9:53 pm
Post subject: How to Know if Credit Card Consolidation is The Best Option
That was Joy's first answer, but then I was worried about utilization average which shouldn't be but 33% or so. Guess it's a "No Brainer" where interest is concerned and six months is better than paying it that's for sure.
Thank you for your expedient answer Mouse. I am going to do this.
Author: spjoink
Posted: Mon Aug 21, 2006 12:09 am
Post subject: How to Know if Credit Card Consolidation is The Best Option
absolutely...DO IT!!!!
Author: rapjunkie
Posted: Mon Aug 21, 2006 12:47 am
Post subject: How to Know if Credit Card Consolidation is The Best Option
Definitely... utilization is no big deal compared to an opportunity to save money.
Author: hdporter
Posted: Mon Aug 21, 2006 7:12 am
Post subject:
While my answer might be the same, I'd look at the variables a little more closely.
First, what is the fee on the transfer?
What is the average rate of the cards from which you're transferring balances?
In the case that you don't move the balance from the new card before expiration of the BT 0% promo rate, what rate will be charged on the new account.
Again, I don't have any particular bias against this move. But consider that if the BT fee is 3% per transfer, when charged against a six month promo, the APR on the fee climbs to up to 6%+. That's a far cry from paying 0%.
Also, consider that when the promo rate expires that you'll likely be looking to trasnsfer balances again, potentially incurring further fees. Plus, since good offers are limited in duration, you may find yourself transferring balances after only 4 or 5 mo., increasing the effective APR on the original BT to an even higher amount.
I don't think that anyone questions that near maxing out a card will likely make a serious dent in your credit score. Granted, you don't live or die by your score. However, one source down the road for the strongest attractive offers are new account offers (Chase tends to offer 18 mo/0% on new accounts). The terms of new account offers definitely factor your credit score -- and that's a no-brainer in my book.
If your credit score is at least in the mid-700's, then this isn't a tremendous concern. But if you're treading the high 600's, I'd be very hesitant to push an account to a near 80% util.
In general, I loathe 6 mo transfer offers. I'd hold out for a better one from this card or a new card with stronger BT terms. In either case, I prefer to sit pretty for something like 10mo before I'm scrambling around for another offer.
At minimum ... here's what I invite you to do. Carefully calculate the interest that you'll save over the course of the BT. If you allow a full 6 mo. for this calculation, satisify yourself that after expiration of the offer that you won't be paying a higher rate than you currently are (until such time as you effect a new transfer) on the transferred balance.
Now, back out the BT fee, and look at your 6 mo savings. That net value will put you in the position that you can weigh the advantages of going with a BT offer now, vs. waiting for a better opportunity.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Sun Aug 20, 2006 9:32 pm
Post subject: Wise decision or not?
I hope someone is up who can answer this question tonight for someone I know. I am not sure what to advise her to do!
Question: I have total credit card limits that equal to $36,642.00 on six cards. My total credit card debt is $11,500 to 12k. I have one card with a $15K credit limit that is empty and it has a 0% balance transfer offer until March, 2007. I want to consolidate all my 12K debt on just this one card. Is this a wise decision as I would then only have one card to pay each month? I may receive other 0% offers but I am not worried about it if I don't by March.
I will watch this post for answers. TY!
J~J
"You may never know what results come from your action. But if you do nothing, there will be no result." Mahatma Gandhi
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: mouse
Posted: Sun Aug 20, 2006 9:39 pm
Post subject: Re: Wise decision or not?
If it saves interest money it is a no brainer...DO IT
Author: JoyJoy
Posted: Sun Aug 20, 2006 9:53 pm
Post subject: How to Know if Credit Card Consolidation is The Best Option
That was Joy's first answer, but then I was worried about utilization average which shouldn't be but 33% or so. Guess it's a "No Brainer" where interest is concerned and six months is better than paying it that's for sure.
Thank you for your expedient answer Mouse. I am going to do this.
Author: spjoink
Posted: Mon Aug 21, 2006 12:09 am
Post subject: How to Know if Credit Card Consolidation is The Best Option
absolutely...DO IT!!!!
Author: rapjunkie
Posted: Mon Aug 21, 2006 12:47 am
Post subject: How to Know if Credit Card Consolidation is The Best Option
Definitely... utilization is no big deal compared to an opportunity to save money.
Author: hdporter
Posted: Mon Aug 21, 2006 7:12 am
Post subject:
While my answer might be the same, I'd look at the variables a little more closely.
First, what is the fee on the transfer?
What is the average rate of the cards from which you're transferring balances?
In the case that you don't move the balance from the new card before expiration of the BT 0% promo rate, what rate will be charged on the new account.
Again, I don't have any particular bias against this move. But consider that if the BT fee is 3% per transfer, when charged against a six month promo, the APR on the fee climbs to up to 6%+. That's a far cry from paying 0%.
Also, consider that when the promo rate expires that you'll likely be looking to trasnsfer balances again, potentially incurring further fees. Plus, since good offers are limited in duration, you may find yourself transferring balances after only 4 or 5 mo., increasing the effective APR on the original BT to an even higher amount.
I don't think that anyone questions that near maxing out a card will likely make a serious dent in your credit score. Granted, you don't live or die by your score. However, one source down the road for the strongest attractive offers are new account offers (Chase tends to offer 18 mo/0% on new accounts). The terms of new account offers definitely factor your credit score -- and that's a no-brainer in my book.
If your credit score is at least in the mid-700's, then this isn't a tremendous concern. But if you're treading the high 600's, I'd be very hesitant to push an account to a near 80% util.
In general, I loathe 6 mo transfer offers. I'd hold out for a better one from this card or a new card with stronger BT terms. In either case, I prefer to sit pretty for something like 10mo before I'm scrambling around for another offer.
At minimum ... here's what I invite you to do. Carefully calculate the interest that you'll save over the course of the BT. If you allow a full 6 mo. for this calculation, satisify yourself that after expiration of the offer that you won't be paying a higher rate than you currently are (until such time as you effect a new transfer) on the transferred balance.
Now, back out the BT fee, and look at your 6 mo savings. That net value will put you in the position that you can weigh the advantages of going with a BT offer now, vs. waiting for a better opportunity.
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 11:02 PM
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