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Question By
t0ms0nn

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1 Person Helped
Transfering balances to spread utalization? + Some bad mistakes
Hello everyone, so stupid me; before I started to read about credit scores, utilization, best options I decided to increase my own credit my way, so I opened 3 new credit cards because I figured that it will increase my score, well, it went down.
So this is what I have, and this is are my options, I just need some advice...

CS: 654
Discover: 2200/2500
Walmart : 700/900
Express : 340/900
Chase freedom ( opened&activated a week ago ) 0/1300
Chase slate ( opened & activated a week ago ) 0/900
Zales ( not activated )

Option 1.
Do not activate Zales.
Transfer 700 to Chase Slate / Freedom, (0.00APR) so I dont have to pay for walmart apr.
Keep paying off discover, increase the payments, and pay before the statment is due. ( I will try make 200$ monthly)

Option 2.
Should I transfer discover & walmart balances to Chase's, or transfer some just to give a less utilization to discover & walmart, and do not transfer more than 30% to Chases'?

Or any other ideas?

Also, Walmart does not allow to transfer balances, does paying a credit card with another card will affect you negativley?

Thanks all!!

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Top Contributor
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Most Helpful Response

Be careful with what you do!

Helpful to 4 out of 4 people

When you open a new credit card, the score always goes down before it can go up again. This is because of the hard inquiry and the reduction in average credit length (due to 0 month old of new credit). Your option 1 does not make sense to me. You asked for and now you got new card, so why not activate to use it? Remember that not activating a card just prevents yourself from using it. All info of the account associated with that card will still be reported every month to the credit bureaus (of balance $0, together with its credit limit). In other words, the credit has been given to you, the card, after activation, is just a means for you to access that credit.

You should know the difference between APR for balance transfer and APR for purchase. If any of your card has 0% APR (or an APR much lower than that of the old card) of balance transfer (not of purchase), you can transfer other balance to this card. However even you see 0% APR of balance transfer, it is NOT FREE to do so, normally you pay a fee of 3% of how much you transfer. It seems like you haven't done any balance transfer before, so if any of your old cards (Walmart, Discover, American Express you meant?) is still having 0% introductory APR of purchase, just leave the balance there and pay minimum every month. That way you don't have to pay for purchase interest or fee of balance transfer. If those mentioned scenarios do not apply to you, balance transfer will normally NOT help you paying down your debt.

One more thing, you said you will try to make $200 monthly. If that's what you will have left after your monthly expense, then yes you can pay down your credit. If not, you will most likely be deeper down into the debt of your credit game. Choosing which credit card to pay down first is another problem, which will require some math, so be careful with what you do!

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Helpful to 1 out of 1 people

You will definitely want to do a balance transfer to your Chase cards if they are in fact 0% balance transfer rate. The thing you need to watch out for is how much you transfer. I learned this the hard way by having 3 cards, I paid off 2 then got a balance transfer deal from those 2, I then transfer as much as I could from my 1 high APR card onto my 2 balance transfer 0% rates. Well I didn't realize that although my overall utilization rate was the same, since I transferred an amount close to my limits, my cards because "maxed out" and my credit score tanked 76 points. I luckily had the money to pay those down under a reasonable utilization rate to make up for that mistake, but it has delayed a car purchase I was just about to make. I would recommend transferring about $500 from your Discover (88% utilization rate) onto your Slate which will put it at 55% utilization rate and drop your Discover to 68%.

To answer your Walmart card question, no paying the balance with another card will not hurt your score; however you will not get your 0% balance transfer promotion, so I do not recommend it. What I would do, is transfer about $900 more of your Discover onto your Freedom card which would put that at a 69% utilization rate and drop your Discover down to a $800 balance and a 32% utilization rate. From that point, start with your lowest balance first (Express) and get it paid off in a couple of months, while making the minimum payments on your other cards. Then move to the next smallest balance and focus on it (Walmart), then when that is paid off, hit Discover and get it paid off in a few months. Within a year you should be then working down your Slate & Freedom 0% balance transfer cards and your score should be jumping like crazy. Remember to continue to charge gas for your car on your paid off cards each month and pay them off in full to keep getting on-time payments stacked on to build your credit further.

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Reply by
JBirley15

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Helpful to 1 out of 1 people

The reason I say focus on the lower balance cards first is because of the moral victories you will get from seeing a 0 balance. Don't be fulled by hitting the highest interest cards first, sure it makes the most money sense; however, think of it this way, you will have monthly payments on 5 cards after the balance transfer, if you do minimum on 4, then pump all your extra money into paying off the lowest balance card (let's say it has $40 monthly payment), once that card is paid off that is $40 of an obligation you no longer have, meaning $40 more you will have to put in each month on the next card. Then you pay off your second highest (Let's say it has a $60 monthly minimum), once that is off now that is a whole $100 extra to dump into the third card with 2 cards fully paid off. You will feel good seeing paid off cards, and you will be able to make even larger payments on the next card which will help pay it off even faster.

Reply by
t0ms0nn

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Helpful to 1 out of 1 people

Okay, I get the point, how about this strategy.

400 from discover to chase slate = 44% utilization

600 from discover to chase freedom = 46%

disover 1200 / 2500 = 48%

start paying off express (300 balance) then hit walmart hard (700)

this way Ill keep utilization under 50% on the three cards, pay them minimum, and try to pay off walmart & express asap

is that a good idea?

also, will my score be higher since let say now my credit card utilization is 80

($3428 / (2500 + 900(walmart) + 840 (express)) = 80

and even if I dont do any changes, or add more credit balances it would look like this

(2500 + 900 + 840 + 1300 + 900 ) = 6440

3428 / 6440 = %53

So will it go higher?

Thank you sir,

appreciate your help!

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Reply by
nguyenq66850

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Helpful to 1 out of 1 people

Something I forgot to point out is that "Paying a credit card with another card" is actually balance transferring. If you meant Walmart does not allow other card to transfer balance to it, you can transfer its balance to other card (to Chase's). All balance transfers are subject to approval from the receiver (Chase in your case). According to what you expressed, I would assume that your old cards do not have 0% APR of purchase any more and your new 2 Chase cards have 0% APR of balance transfer, in 1 year, normally. If you can transfer Walmart balance to Chase, you should transfer like $600 from it to Slate and pay it off in 1-3 months. If not, you have only one option to transfer your Discover balance to both Chase cards. I would prefer the suggestion of JBirley15 or transfer a bit more ($900/$1300 to Freedom to make it 69% and $600/$900 to Slate to make it 67%, so Discover will be $700/$2500 = 28%). Because every month after the transfer, you have to pay only minimum for the 2 new Chase Cards. So the faster you can pay off your old cards, the less stressful you are, because those old cards require not only minimum but extra for running down their balance until they are paid off. Don't focus on your credit score! If you manage your debts well, good credit report and good score will follow. Also, with your current $200 remaining to pay your debts every month, you should not think of applying for any other loan, because you won't be able to pay it. Put yourself in the shoes of credit grantor, you would not approve yourself either, right?. So don't try. That will just hurt your score with a denial! Another reason for not worrying about your credit score, for now.

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Reply by
JBirley15

119 Contributions
1099 People Helped

Your new plan works just the same as mine. Mine simply maximizes the 0% interest, but if you are okay with covering the interest, keeping all cards under 50% is a pretty good idea as well. As far a you score rising, there is no guarantee it will rise immediately, but it definitely will across the next 6 months if you stick to that plan and do not charge anything else or aply for any more credit. After graduating grad school I was at a utilization rate in the 90's, I got a good job and used the method I told you; I paid off my two lower balance cards, then went after my higher balance (and higher interest rate) card by doing nothing else except paying off debt my score rose over 100 points in 7-8 months.

Remember, once your cards are paid off, do not leave them sitting inactive, make sure to charge gas or groceries each month (a charge you are going to use your debit card for anyway) and just pay it off your statement balance in full each month. Both of these tactics will raise your score immensely, I just can tell you exactly when. I saw small increases in mine each month, with a couple large jumps when I hit new milestones (i.e. getting my utilization under 60% raised my utilization grade from a D to a C, then under 40% it raised to a B).

2 Contributions
1 Person Helped

Thank you for the replay.

So you would not suggest me yo transfer balances to my Chase cards?

I understand that there might be a fee for a transfer balance, but wouldnt it increase my credit because I would spread the utilization?

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