How would you manage this credit card debt? Shifting debt through a balance transfer problem?

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NO LECTURING PLEASE….Wife got a house that needed $ 10,000 in repairs in order to be presentable / rentable….So I didn’t have much choice in maxing out my Home Depot in 3 weeks ($ 6,000) in order to buy everything from vanities to doors to lights to paint…My credit is meaningless at this point because I don’t plan on using it and couldn’t if I wanted to because I don’t have a job (grad student).

That being said, I know Home Depot is a paid in full within 6 months card to avoid interest. And I know a month from now I apply to any new cards they will see the maxed out card and DENY ME INSTANTLY…So I quickly applied before anything dramatic would show and I was approved for a Chase Freedom with $ 7500 line and 0% apr on balance transfers for a year.

Here is my situation:

1) Merrill : about $ 1000 out of $ 2500
2) Discover: about $ 1500 out of $ 3100
3) Home Depot: $ 5,990 out of $ 6,000

4) Chase Freedom: $ 0 out of $ 7500

I was thinking about just moving my Discover and Merrill totals to my Chase so that way I could condense 2 bills into 1 bill….Then pay off the Home Depot within the next 6 months…But I am afraid the 100% utilization and maxed out limit will devastate my credit score.

So the other option is leave the Merrill / Discover where they are and transfer about $ 3500 on the Home Depot to the Chase.

That will leave me with 4 cards at roughly 50% the limit on each…

These other cards recently got put to use as well with appliances, etc. I have been very meticulous about keeping balances low up until this point.

On a good note the rental will proved roughly $ 1,000 of extra income per month and the first tenant will provide 2 months in rent up front ($ 2,000)….On top of that I get about $ 4500 in a student loan in May which will be used to zero out my debt.

What is better for my credit score and for my financial well being?

1) Move about half the Home Depot debt to the Chase Freedom…Leaving, say $ 3500 out of $ 7500 on the chase (46.6%) and dropping my Home Depot from 100% the limit to $ 2500 out of $ 6000, or 41.6%.

2) Leaving the home depot maxed out, paying it off in full within the next 6 months….And consolidating my Discover/Merrill to the Chase Freedom…This scenario will leave the Discover/Merrill empty but my Chase will have about $ 2500 / $ 7500 (33.3%) but the Home Depot $ 6,000 / $ 6,000!

What do you think…And no lectures..Sh!t happens!!!
@Cat Dad…..So the most convenient for me is to eliminate the Discover/Merrill (2 cards) and consolidate that debt to the Freedom….

Leaving $ 2500 / $ 7500 on the Freedom
Leaving $ 6,000 / $ 6,000 on the Home Depot

1 less bill to pay and worry about per month…

Is this my best option then?

1 Comment
  1. Reply
    CatDad
    June 26, 2011 at 11:57 am

    You would not ruin your credit score by moving everything to the Chase Freedom card. Your entire available balance among all cards is considered in your total credit utilization, not on just the one card that you;re using. You may see a moderate drop though.

    Credit card companies, esp. Chase, have all sorts of favorite tricks to play and they’ll pounce all over you for the slightest mistake. Paying just one day late on the Chase card will cause the 0% to go to 25% or more. Also, Chase has another favorite trick of tweaking due dates so that your due dates coincides with a Sunday…a day that payments are not processed. It’s a great way to get late fees and to raise your rate. So, if you go with Chase, be extra careful with paying on time. Pay electronically via with website…don’t mail in payments.
    – Once you start transferring balances around to where you have other cards with $ 0 balance and big credit limits, for many people it’s simply too tempting to start using all that available credit again and before you know it you’ll be in twice as much debt. If you do this, either cut up the other cards or contact the credit card companies and request voluntary credit limit reductions to under $ 500 to avoid temptations.
    – The best option would be to go to a credit union and get a real loan that is not subject to Tony Soprano tactics of credit card companies. Credit cards are a dreadful way to finance anything…then either cut up your cards or have them reduce your credit limits to $ 500 to keep you out of the debt trap.

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