Should I move my high interest credit card balance to another bank given that my income is now lower?
February 4, 2010 3:53 PM Subscribe
Are there hidden dangers in balance transfers?
Should I accept an offer for a 1% balance transfer and a decent APR? My finances are very different than they were when I first got my present Visa card. With my currently lower income, I think it unlikely that I would be extended the same credit line that is now available to me. I like knowing that if I needed them, funds would be available to me in an emergency. Thus, I'd like to put the majority of my balance on a new card with a lower rate, but hang onto the old card with its substantial credit line. Will applying for the new card trigger activity in my credit file that would result in a credit line reduction?
Should I accept an offer for a 1% balance transfer and a decent APR? My finances are very different than they were when I first got my present Visa card. With my currently lower income, I think it unlikely that I would be extended the same credit line that is now available to me. I like knowing that if I needed them, funds would be available to me in an emergency. Thus, I'd like to put the majority of my balance on a new card with a lower rate, but hang onto the old card with its substantial credit line. Will applying for the new card trigger activity in my credit file that would result in a credit line reduction?
I'm probably breaking a MeFi rule (please scold me someone if I am) - but if you are carrying a balance already, it would make more financial sense to take the balance transfer to reduce your interest rate and work on paying things off, then get rid of the old card, which you can't afford to use anyway. Or at least lock it up and don't use it...
posted by TravellingDen at 4:33 PM on February 4, 2010
posted by TravellingDen at 4:33 PM on February 4, 2010
I paid off my credit card debt by first transferring balances from high APR cards to low APR cards. I had no problems. The low APR credit card accounts that I opened did have substantially lower limits so I think I opened a couple to absorb the balance. My credit rating is totally fine by the way.
posted by fieldtrip at 8:32 PM on February 4, 2010
posted by fieldtrip at 8:32 PM on February 4, 2010
Like fieldtrip, back when I had credit card debt what helped me pay it off was to transfer balances back and forth between cards, depending who was willing to give me the lower rate. Credit card companies want your debt, and are willing to take the gamble that they will be the ones holding it if something goes wrong...at which point they can then penalize you by charging fees and higher rates. But as long as you are paying it off, you should have no problem. I actually developed great credit doing this.
posted by dawnoftheread at 10:56 PM on February 4, 2010
posted by dawnoftheread at 10:56 PM on February 4, 2010
The thing to watch out for is that there is sometimes a fee associated with the balance transfer itself. Sometimes it is a flat fee, but sometimes it is a percentage fee. You don't want to get hit with a 10% fee when transferring $10,000. Also, check when the APR ends. Sometimes it is for the life of the balance, sometimes only a few months. As with anything to do with credit cards, read the fine print.
posted by sophist at 11:23 PM on February 4, 2010
posted by sophist at 11:23 PM on February 4, 2010
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It could. Credit card companies you can open accounts with do have limited access to your current credit file, and recently have been reducing people's credit lines based on their increasing balances on other cards. So your current card company can probably find out about the new card.
posted by Jacqueline at 4:01 PM on February 4, 2010