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saffron2moon

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pay off or consolidate to new card?
I am in a position to pay off 2 of my smaller cards. These were the first cards with rather high interest rates that I received to start building my credit. I'm wonder if I should just pay them off or have balance transferred to a lower rate card? My credit score is slowly moving up and don't want to do something that will cause to go back down!

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Payoff cards

Trasnfering a balance won't really help you and depending on the limit of the card you are transfering too, it could harm your credit.

IE.  Let's say you have two cards each with a $500 limit that are at a balance of $250 each.  You're new card has lower interest and also has a limit of $750.  If you transfer both cards to the new card, your credit utilization would go from 50% to 75%.   While you would think TWO cards at 50% would be the same as 1 card at 75%, the score model sees the credit utilization at 75% as worse (Not huge, but worse for sure.)

So, you will want to be careful in making the transfer and keep in mind the % of credit utilization as you do.  The good news is that if you are trasnfering to low or no interest and you don't need your credit scores to be higher for a time period long enough to allow you to pay the card down, it will be easier to pay the card down with the lower interest rate.

So, it's really just important to understand what your goals are and act accordingly.  Also, you can be benefited by speaking with a credit expert to give you some more specific guidance.  Most reputable companies will provide a complimentary review (Such as ours) if you need further assistance, feel free to click on my profile name for contact info.

Hope that helps,

Joe

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