Q: I have two credit cards with balances of $18,000 and $12,000. I would like to put them together under one credit card with lower interest.
First, for you to qualify for a new credit card with a $30,000 credit limit, you'll have to have an excellent credit score. You'll also need to prove to your prospective credit card issuer that you have enough income to pay off a $30,000 debt pretty quickly if you need to.
Second, I want you to think about the overall impact your move will have on your credit score. Even if you score a great balance transfer credit card with a low introductory rate, you could throw your "credit utilization" out of balance. FICO and other credit scoring algorithms penalize you when any of your credit cards gets close to maxed out.
Third, there's hidden value in keeping your oldest credit card active. Again, credit scoring algorithms give you credit for loyalty. So, unless you're paying an absurd annual fee on your oldest card, try to keep it going.
Therefore, instead of closing two cards and maxing out the new one, a more realistic solution that still saves you money involves opening a third credit card and rebalancing your debt, so your credit utilization evens out across all three cards. Start by getting your balances below the halfway mark on all three cards, then throw everything you've got at that debt until you've paid it off. Some great balance transfer offers that can help you right now include:
The Chase and PenFed card run promotional introductory signup offers with no balance transfer fee for transfers made within a specified time frame and a low introductory purchase APR. Offers change frequently, so compare credit cards on our database to find the least expensive deal based on your current credit history.
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