Lower FICO Means Higher Credit Card Account APR
Guest: JoyJoy
Credit Expert (100+ Posts)
Post subject: Lower FICO Means Higher Credit Card Account APR
Posted: Sun Sep 17, 2006 3:42 pm
Hi Hd!
I will send Alecia a copy of your response by snail mail. She has returned home now. She is a bit impatient waiting for answers.
I'm going to help her with the taxes so she won't have to worry about adding to her debt at this time.
The advice Hd is very good and I'm sure she will graciously receive it and act accordingly.
Thanks all of you for helping her!
JoyJoy
_________________
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!
Guest: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Posted: Sun Sep 17, 2006 3:51 pm
hdporter wrote:
Alecia,
I apologize that I haven't been able to reply before this, however, looking for 7 hr turnaround is a bit unrealistic, don't you think
I respect mouse's position on FICO. However, I think that anyone with a FICO below 720 should give some thought about it. Dropping your score by 20 points because of one or two accounts that move above 40% utilization could preclude you from getting the best rates and highest balance offers. And, if your score is below 700, there's little doubt in my mind that the lower your FICO runs the more you'll pay in interest on any cards that aren't at promo rates or, for the matter, on mortgage products.
I agree that it's ideal to maintain a limit number of accounts in general, particularly those with balances. However, my scores are at 730 (with 6 reported delinquent payements 5+ years ago) despite the fact that I have 12 accounts currently reporting with balances.
If you need to open another account in order to keep your interest charges to a minimum, I think it's a prudent move. Of course, if you can manage to use existing accounts, that might be the way to go given that you appear to have a decent amount of new credit activity in the last year (with a very recent new account opening). I find that if you can space openings out by at least 3-4 months, you stand a stronger chance of approval with better likelihood of a high limit (nothing hard and fast in that, however).
I think it's worthwhile to consider taking an account up to just under 40% utilization. However, that doesn't give you sufficent room to handle the tax transfer with just one card. I think opening a new Discover a/c is your best option.
Since the Discover offer likely has a 3% bt fee attached, you might wish to wait to make the transfer until after you receive your card and know your limit. It's a decent precaution in case they only come through with a $5K limit. If Discover doesn't come through with the $10K limit that would be desirable to handle this tax bill, you can take advantage of one of your existing card offers to take up anything that otherwise would take you over 40% on the Discover.
Finally, there's some concern over how to structure the transaction. If Discover will allow you to use a "BT" check to pay your taxes directly and give you the benefit of the BT offer, that's ideal -- since you only face one BT fee. If it's necessary for you to route the payment through another credit card, you're at some risk.
If you pay the taxes with another credit card, and then do a BT from Discover, the BT will first go to any promotional rate balance while the tax charge will accrue interest at the current stated rate. If you have a promotional rate and duration on purchases on the alternate card that's as strong as your rate on any current balance on that other card, then this isn't a problem. However, if purchases will draw a higher rate or a shorter promo term, then you need to take care to structure this to your best advantage.
- Harry
I HAVE MANY $100,000's "AVAILABLE" TO COMPENSATE FOR ANY MAXED-OUT 0.00% BT
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: JoyJoy
Credit Expert (100+ Posts)
Posted: Sat Sep 23, 2006 9:23 pm
Harry you have given me a lot of food for thought. I am considering the Discover card but I'm wondering if I should apply for it so soon after receiving a BOA credit card. I received an Amex card in July also.
I am paying my own tax bill even though Joy offered to help. I paid off my Citibank card which has a $4800.00 credit limit. I turned right around and asked them to send me a bt check for $1,800.00. This coupled with a $1,550.00 bt and a $1,000.00 from my own personal account should take care of the tax issue.
Discover wants to give me a bt offer until June, 2007 and will extend it several more months if I agree to make two purchases a month until January, '08. They do charge a 3% bt fee.
I received another offer this week from ESPN Total Access Card from Washington Mutual Bank. 0% fixed APR until January 1, 2008 on balances transferred now. 9.99% on purchases. 9.99% on balance transfers after January 1, 2008. I could move the $1,800 and $1,550.00 there if the balance is high enough.
Right now I have one card that is a little over 40% but under 50%. My main problem is not knowing when to stop accepting offers. I always think the one in the mail is better than the other ones I have. I just feel the offers may stop now that the economy is slowing down and having cards to transfer what I do have to the year 2008 sounds good to me. I am paying down my cards each week now. I believe I should join a credit monitoring service so I can know beforehand what my credit looks like before applying for any other cards.
I'm here for two weeks so answer if you feel like it. Any help from anyone is appreciated. I'm housesitting for Joy and her hubby! This forum has a lot of good information.
Alecia
_________________
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!
Credit Expert (100+ Posts)
Post subject: Lower FICO Means Higher Credit Card Account APR
Posted: Sun Sep 17, 2006 3:42 pm
Hi Hd!
I will send Alecia a copy of your response by snail mail. She has returned home now. She is a bit impatient waiting for answers.
I'm going to help her with the taxes so she won't have to worry about adding to her debt at this time.
The advice Hd is very good and I'm sure she will graciously receive it and act accordingly.
Thanks all of you for helping her!
JoyJoy
_________________
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!
Guest: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Posted: Sun Sep 17, 2006 3:51 pm
hdporter wrote:
Alecia,
I apologize that I haven't been able to reply before this, however, looking for 7 hr turnaround is a bit unrealistic, don't you think
I respect mouse's position on FICO. However, I think that anyone with a FICO below 720 should give some thought about it. Dropping your score by 20 points because of one or two accounts that move above 40% utilization could preclude you from getting the best rates and highest balance offers. And, if your score is below 700, there's little doubt in my mind that the lower your FICO runs the more you'll pay in interest on any cards that aren't at promo rates or, for the matter, on mortgage products.
I agree that it's ideal to maintain a limit number of accounts in general, particularly those with balances. However, my scores are at 730 (with 6 reported delinquent payements 5+ years ago) despite the fact that I have 12 accounts currently reporting with balances.
If you need to open another account in order to keep your interest charges to a minimum, I think it's a prudent move. Of course, if you can manage to use existing accounts, that might be the way to go given that you appear to have a decent amount of new credit activity in the last year (with a very recent new account opening). I find that if you can space openings out by at least 3-4 months, you stand a stronger chance of approval with better likelihood of a high limit (nothing hard and fast in that, however).
I think it's worthwhile to consider taking an account up to just under 40% utilization. However, that doesn't give you sufficent room to handle the tax transfer with just one card. I think opening a new Discover a/c is your best option.
Since the Discover offer likely has a 3% bt fee attached, you might wish to wait to make the transfer until after you receive your card and know your limit. It's a decent precaution in case they only come through with a $5K limit. If Discover doesn't come through with the $10K limit that would be desirable to handle this tax bill, you can take advantage of one of your existing card offers to take up anything that otherwise would take you over 40% on the Discover.
Finally, there's some concern over how to structure the transaction. If Discover will allow you to use a "BT" check to pay your taxes directly and give you the benefit of the BT offer, that's ideal -- since you only face one BT fee. If it's necessary for you to route the payment through another credit card, you're at some risk.
If you pay the taxes with another credit card, and then do a BT from Discover, the BT will first go to any promotional rate balance while the tax charge will accrue interest at the current stated rate. If you have a promotional rate and duration on purchases on the alternate card that's as strong as your rate on any current balance on that other card, then this isn't a problem. However, if purchases will draw a higher rate or a shorter promo term, then you need to take care to structure this to your best advantage.
- Harry
I HAVE MANY $100,000's "AVAILABLE" TO COMPENSATE FOR ANY MAXED-OUT 0.00% BT
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: JoyJoy
Credit Expert (100+ Posts)
Posted: Sat Sep 23, 2006 9:23 pm
Harry you have given me a lot of food for thought. I am considering the Discover card but I'm wondering if I should apply for it so soon after receiving a BOA credit card. I received an Amex card in July also.
I am paying my own tax bill even though Joy offered to help. I paid off my Citibank card which has a $4800.00 credit limit. I turned right around and asked them to send me a bt check for $1,800.00. This coupled with a $1,550.00 bt and a $1,000.00 from my own personal account should take care of the tax issue.
Discover wants to give me a bt offer until June, 2007 and will extend it several more months if I agree to make two purchases a month until January, '08. They do charge a 3% bt fee.
I received another offer this week from ESPN Total Access Card from Washington Mutual Bank. 0% fixed APR until January 1, 2008 on balances transferred now. 9.99% on purchases. 9.99% on balance transfers after January 1, 2008. I could move the $1,800 and $1,550.00 there if the balance is high enough.
Right now I have one card that is a little over 40% but under 50%. My main problem is not knowing when to stop accepting offers. I always think the one in the mail is better than the other ones I have. I just feel the offers may stop now that the economy is slowing down and having cards to transfer what I do have to the year 2008 sounds good to me. I am paying down my cards each week now. I believe I should join a credit monitoring service so I can know beforehand what my credit looks like before applying for any other cards.
I'm here for two weeks so answer if you feel like it. Any help from anyone is appreciated. I'm housesitting for Joy and her hubby! This forum has a lot of good information.
Alecia
_________________
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!
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