Is it better to transfer credit card balances?
I have 3 credit cards. My COMBINED balances make up 24% of my COMBINED credit limits. In terms of a credit score increase, is it better to transfer those balances to the card with the most room? I have one card with a $7K limit and a $0 balance. This is also the newest (less than 2 mos. old) The balances on the other two (older) cards are closer to their limits. One has a $1k limit with a $800 balance, the other has a $3k limit with a $2k balance. I’ve heard that not being very close to your limit can increase your credit score. But, I don’t know if this formula considers each account separately or if it looks at the combined balances vs. the combined limits. Please help.
At this point, I’m not as interested in the interest rate as I am in raising my credit score this month. (I’ve been monitoring it over the last few months, but made two large purchases recently). I will pay the debt down during the next few months.
Usually they look at what your “assumable debt” is (how much CAN you rack up). They also look at late pmts. It is always best to transfer to a low interest rate card. Just keep up your payments, and be on time!
In terms of a credit score it is better to have the 3 credit cards with balances and make more than your monthly payment on time every month. You never want to max out your cards because then it looks as if you don’t have the money to pay back. In terms of you and and a financially smart decision would be to do the balance transfer. Usually when you do a b/t they will offer you a lower introductory rate for 6mos-1yr and in that time you will pay a lot less interest, however, it will not help you to boost your credit score as quickly as the other way. It won’t hurt you though. Just to let you know here is how you calculate monthly interest charges:::::Lets say that your balance is $5000.00 and your interest rate is 13.99% the cycle for that month is 31 days. You takes 13.99% divide it by the days in the year 365 multipy that by the balance $5000.00 and multipy that by the number of days in the cycle 31. Then you take that number and move the decimal over 2 times and you have your finance charges for that month. 13.99%/365=0.0383287x$5000.00=191.6435×31=5940.9485=$59.41 in finance charges.
Go to and read up. This is the site that developed the scoring system and they have lots of good educational material.
Keeping in mind that balance transfers cost you a fee, and many times there is a separate interest rate that applies. Before you do anything, read the contract for your new card carefully.
I would like to see you put the debt on the card with the lowest interest.
One warning, did you get this new card for the purpose of consolidating debt? Be vary carefull doing this. The temptation of having all that new credit will end up with you being $7000 in debt and struggling to get it paid off.
You have to learn to control your spending. Pay these debts off and stop rolling them around.
The formula you are talking about looks at the combined balance. Basically they look at all of your credit limits combined. You don’t want to be using too high of a percentage of this total balance, but I’d say 24% is perfectly fine. Your limit on individual cards is not really a factor. Also, having too many credit cards can negatively affect your credit score. Typically you want to limit your number of credit cards to 2-3.