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Using balance transfer to pay credit card

Using balance transfer to pay credit card

Old Feb 18th 2009, 9:17 pm
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Default Using balance transfer to pay credit card

Is this going to hurt my credit score?

I've taken a 'balance transfer' offer and used it to put cash into my checking account. Then I paid off a different credit card with some of the cash from my checking account.
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Old Feb 18th 2009, 9:41 pm
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Default Re: Using balance transfer to pay credit card

Originally Posted by notacrime View Post
Is this going to hurt my credit score?

I've taken a 'balance transfer' offer and used it to put cash into my checking account. Then I paid off a different credit card with some of the cash from my checking account.
It may, depending on what your utilization is now on the card that you transferred the balance to. Maybe a couple of points, something negligible. As long as you save money on the interest rate so you can work on paying it down.

If you zeroed the other card out and keep it that way, it should all even itself out. But it does depend on the credit available on each card and the balance you are carrying.
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Old Feb 18th 2009, 10:19 pm
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Default Re: Using balance transfer to pay credit card

I do it all the time. Esp when the one company is offeringa really good interest rate (say 0% for a yr, or 3.99% for the life of the xfer). Never hurt my credit, and I've been doing it for 10 years. My credit is well into the mid to upper 700s. I wouldn't necessarily go ahead and close the the first card though, until I have paid enough down on the new card, to prevent what Steve pointed out.
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Old Feb 18th 2009, 10:32 pm
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Default Re: Using balance transfer to pay credit card

OK, phew. Thanks for your replies. I was a bit worried about it as I've heard people mention 'using credit to pay credit' as a bad thing. (Clearly it's a bad thing for your sanity if you are relying on it to get by each month.)

I did zero out the balance on the 2nd card. The card I took the transfer offer on had a zero balance already and the transfer amount I took is 1/5th of the available credit. I should be able to pay it back in 2 months.
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Old Feb 19th 2009, 6:39 am
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Default Re: Using balance transfer to pay credit card

Originally Posted by notacrime View Post
I did zero out the balance on the 2nd card. The card I took the transfer offer on had a zero balance already and the transfer amount I took is 1/5th of the available credit. I should be able to pay it back in 2 months.
You should be fine, then. 10% util is the Holy Grail for FICO, but the alarm bells don't start to ring until 25%.
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Old Feb 22nd 2009, 2:12 am
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Default Re: Using balance transfer to pay credit card

Originally Posted by chartreuse View Post
You should be fine, then. 10% util is the Holy Grail for FICO, but the alarm bells don't start to ring until 25%.
so does maxing out your credit card hurt your credit rating? I assumed that dinging your credit rating would only occur if you didnt pay your bill on time or something. Reason I ask is that I have a card which gives me airmiles for every dollar i spend on it, and i also want to book our airline tcikets with it which gives me even more airmiles, but would mean it will be very close to the limit (within 100 dollars).

Will be paying it off the folowing month, but takes us so close to the limit as it only just covers the cost of two return tickates.

will that affect my credit rating with FICO then? And what about the other credit agency people? still working on our score but currently in high 600's.

Last edited by Chrissywissy100; Feb 22nd 2009 at 2:14 am.
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Old Feb 22nd 2009, 9:09 am
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Default Re: Using balance transfer to pay credit card

Originally Posted by Chrissywissy100 View Post
so does maxing out your credit card hurt your credit rating?
Short answer - yes. Your FICO score is based on a number of factors. One of these is "utilization" - amount of debt as a percentage of available credit.

AIUI, there are two sub-measures - total utilization and utilization per card. Total U is the big one - as others have said, if you have enough available on other cards to dwarf the balance on one card then the effect should be small.

To an extent, though, we're guessing as Fair Isaac keep the algorithms secret. A good place to learn more is creditboards.com
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Old Feb 22nd 2009, 9:23 am
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Default Re: Using balance transfer to pay credit card

Originally Posted by chartreuse View Post
Short answer - yes. Your FICO score is based on a number of factors. One of these is "utilization" - amount of debt as a percentage of available credit.

AIUI, there are two sub-measures - total utilization and utilization per card. Total U is the big one - as others have said, if you have enough available on other cards to dwarf the balance on one card then the effect should be small.

To an extent, though, we're guessing as Fair Isaac keep the algorithms secret. A good place to learn more is creditboards.com
ok, so if i max out credit card A, score is still reasonably ok as amount owed on total credit is still less than 1/6th of credit available on credit card B?

I think I make too many assumptions on how things work in this country! Really should look into these things more shouldnt i!! I'll look at creditboards.. thanks!
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Old Feb 22nd 2009, 3:58 pm
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Default Re: Using balance transfer to pay credit card

Originally Posted by notacrime View Post
Is this going to hurt my credit score?

I've taken a 'balance transfer' offer and used it to put cash into my checking account. Then I paid off a different credit card with some of the cash from my checking account.
You don't say if the BT offer came from an existing card, or if you opened a new credit card account with the BT offer attached to it. That will make a difference in the answer to your question.

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Old Feb 22nd 2009, 4:08 pm
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Default Re: Using balance transfer to pay credit card

Originally Posted by Jenney & Mark View Post
You don't say if the BT offer came from an existing card, or if you opened a new credit card account with the BT offer attached to it. That will make a difference in the answer to your question.

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It was on an existing card that I've had since 2001. What's the difference?
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Old Feb 24th 2009, 3:46 am
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Default Re: Using balance transfer to pay credit card

Originally Posted by notacrime View Post
It was on an existing card that I've had since 2001. What's the difference?
The difference is that you are not opening a brand new account in order to use the BT offer. Applying for new credit can potentially harm your credit score. It might not -- but it might.

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