Spreading Debt Across Multiple Balance Transfer Cards

May 31st, 2009

mulltiplecardsAre you planning to use a balance transfer card?  Most people who do usually find just one card with good terms and use that one account to move all their existing debt into.  While doing that is very beneficial, especially looking towards the future, it does have its drawbacks.

Unless you have an exceptionally high credit limit, it’s very likely that transferring your existing debt into the new card will fill up at least half of its available balance.  In fact, most folks who I’ve seen do balance transfers end up utilizing between 70% to 90% of the balance transfer card’s limit.  The result is a high credit utilization on a single card that can potentially cause a negative effect on your credit score.

Using Multiple Cards

One technique people are using is to apply for multiple balance transfer cards and spread the debt evenly among them.  That way, instead of fostering very high utilization on one card, you’ll end up using a small percentage of available credit among many cards.   In terms of your ratings, you are depicted as having a high line of credit, while managing it very successfully.   Essentially, it allows you to enjoy the benefits of a balance transfer card, without causing a possible dent in your credit score.

Dangers Of Spreading Debt

Getting more balance transfer cards, of course, means a few caveat.  Multiple cards, for the most part, means multiple annual fees to pay for,  multiple payments to schedule every month and more accounts to keep track off.  That’s a major consideration, especially if you’re already having trouble with all the accounts you have to manage.

noel Posted in Credit Card Guides

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