Utilization on one card vs two (or, is transfering a balance a BAD idea for me?)

You both seem to maintain a lot of credit card debt. High interest credit cards are not the place to have a balance.

A) Is transferring the entire balance of the Capital One card a good or bad idea?

Since you only mentioned the two accounts, I would think a better idea would be to open a new balance transfer card and transfer it to that.

That would:

  • Reduce your interest payments drastically (0% and 0 transfer fee, on the better cards for this)
  • Increase your available credit, thus lowering your utilization

However, you must not add to the balance whatever you do. These cards are not for carrying balances.

B) What is smarter? Paying two cards down simultaneously, despite one having a high APR? Or ditching the high APR card all together, even if that means having a high balance on one single card?

No, pay minimums on the lower APR and devote as much as possible to the higher APR card. When that is paid off, you devote the minimum and what you were paying into the other card into the remaining one.

This is called the avalanche method and it is the fastest way to pay debt like this.

C) If we do transfer the whole balance, should we close the account? Or is it okay to keep a card with a super low balance for emergencies?

No, closing the account would hurt your credit score a lot, due to increasing the utilization even more and reducing the age of your accounts.

Don't keep cards with balances.

/r/personalfinance Thread