Splitting Debt

[Hacker James]

For any financial planners, or economists out there. Which is better?  Purchasing an item and using a single credit card, or splitting the debt between two credit cards with each having similar A.P.R.'s? I am thinking along the lines of the impact of what percentage of available credit you are using and therefore having an effect on your FICO score. Also maybe the payments being split, they would be less. Obviously the payments for each card would depend on balance owed.

[iacas]

If you pay it off, what would it matter?

[Hacker James]

@iacas  It wouldn't, but that was not the question.

[iacas]

3 minutes ago, Hacker James said:

@iacas  It wouldn't, but that was not the question.

Splitting the payments wouldn't change the payments if they're the same APR.

And in both cases you're using the same percentage of your available credit. How it gets reported might vary… but you're still using the same % whether it's on one card or two or ten.

[boogielicious]

9 hours ago, Hacker James said:

For any financial planners, or economists out there. Which is better?  Purchasing an item and using a single credit card, or splitting the debt between two credit cards with each having similar A.P.R.'s? I am thinking along the lines of the impact of what percentage of available credit you are using and therefore having an effect on your FICO score. Also maybe the payments being split, they would be less. Obviously the payments for each card would depend on balance owed.

Wouldn't it depend on if each card had a fixed transaction fee? To clarify, if they both have a fixed transaction fee, then you are double paying that by splitting. With one card, you would be paying it once.

[Abu3baid]

1 minute ago, boogielicious said:

Wouldn't it depend on if each card had a fixed transaction fee? To clarify, if they both have a fixed transaction fee, then you are double paying that by splitting. With one card, you would be paying it once.

I've never heard of transaction fees the buyer pays..  At least not on any credit card I have ever owned.

[Hacker James]

Thank you for the replies. I will just have to compare statements to see exactly what charges there are. Lots of considerations here, how close to maxing out particular cards, debt to credit ratios.  I am looking towards purchasing some new irons and the ones I am looking at will cost between $112 - $140 per club depending on what shaft the fitter puts on them. I may just have to wait a bit longer and try to save up as I am trying to get rid of debt (or at least maintain), rather than increase.  Snowball effect and all that stuff.  On another vane, what about those golf fitting days at local course sometimes offered by OEM, such as Titleist where they bring a fitting van right to the course?

[DaveP043]

12 hours ago, Hacker James said:

For any financial planners, or economists out there. Which is better?  Purchasing an item and using a single credit card, or splitting the debt between two credit cards with each having similar A.P.R.'s? I am thinking along the lines of the impact of what percentage of available credit you are using and therefore having an effect on your FICO score. Also maybe the payments being split, they would be less. Obviously the payments for each card would depend on balance owed.

I'm thinking that most financial advisers would urge you to avoid paying credit card interest when at all possible.  If you can't pay it all off right away, its usually best to wait until you CAN afford it.  When you talk about getting close to your limit, you're talking about adding more debt on top of existing debt, never a good thing in my personal view.  I don't really mind mortgage or even car loan debt, at reasonable interest rates, but when you start taking on debt at credit card rates of 12 to 20%, it just doesn't make sense to me.

[Hacker James]

1 minute ago, DaveP043 said:

I'm thinking that most financial advisers would urge you to avoid paying credit card interest when at all possible.  If you can't pay it all off right away, its usually best to wait until you CAN afford it.  When you talk about getting close to your limit, you're talking about adding more debt on top of existing debt, never a good thing in my personal view.  I don't really mind mortgage or even car loan debt, at reasonable interest rates, but when you start taking on debt at credit card rates of 12 to 20%, it just doesn't make sense to me.

Yes, that was one of my main concerns and obviously the best would be to avoid temptation. I have had some success at lowering debt by taking some out of a low interest credit union LOC and make larger payment on a high interest credit card. Then make enough of an extra payment the following month on the credit union line whereas, that balance pretty much remains static while the other credit card gets paid off sooner. Once a card is paid off, apply what would have been a normal payment as additional payment on another until it is also paid. The key word here is discipline I guess.  Thanks Dave.

[CarlSpackler]

I use the card that gets me miles on American Airlines. 

[Hacker James]

1 minute ago, CarlSpackler said:

I use the card that gets me miles on American Airlines. 

had to laugh a little at that one. Especially the one that asks "What is in YOUR wallet".  Owing to a horrendous experience in the past on their error, that is one card that will never appear in my wallet.

[CarlSpackler]

Just now, Hacker James said:

had to laugh a little at that one. Especially the one that asks "What is in YOUR wallet".  Owing to a horrendous experience in the past on their error, that is one card that will never appear in my wallet.

I don't have one of THOSE cards.

[iacas]

Yeah, if you're already in credit card debt… don't do it.

I tend to forget that other people carry credit card debt. I do not.

(I'm happy to carry my car loan, though… at 0% interest. )

[Hacker James]

Just now, iacas said:

Yeah, if you're already in credit card debt… don't do it.

I tend to forget that other people carry credit card debt. I do not.

(I'm happy to carry my car loan, though… at 0% interest. )

KUDOS to you, but for the rest of us mere mortals...........

[iacas]

1 minute ago, Hacker James said:

KUDOS to you, but for the rest of us mere mortals...........

No, it wasn't a brag. There are a lot of people who don't carry credit card debt. I'm not unique or gifted in that sense…

I recommend you work as hard as you can to pay down your debt while living simply. Your $100 purchase a year ago will end up costing you $140 or something.

[CarlSpackler]

2 minutes ago, iacas said:

No, it wasn't a brag. There are a lot of people who don't carry credit card debt. I'm not unique or gifted in that sense…

I recommend you work as hard as you can to pay down your debt while living simply. Your $100 purchase a year ago will end up costing you $140 or something.

YES! Credit card companies are thieves. Unless it's an emergency (and I have had some of those) don't spend the money unless you can pay off the bill at the end of the month. Eat Ramen Noodles if you have to. I think that's how you spell it. You also want to make sure you have savings built up to cover future emergencies so you don't have to borrow.

[DaveP043]

28 minutes ago, CarlSpackler said:

YES! Credit card companies are thieves. Unless it's an emergency (and I have had some of those) don't spend the money unless you can pay off the bill at the end of the month. Eat Ramen Noodles if you have to. I think that's how you spell it. You also want to make sure you have savings built up to cover future emergencies so you don't have to borrow.

Even though @CarlSpackler and I are giving pretty much the same advice, I wouldn't classify credit card companies as "thieves."  They're a business offering us a significant amount of convenience, in return for which they expect to make money, most of which comes through interest charges.  Those of us who choose to use credit cards go into that arrangement supplied with all the relevant information.  Its nobody's fault but our own when we run up debts we can't pay, or when we end up having to make endless interest payments.  

48 minutes ago, Hacker James said:

Yes, that was one of my main concerns and obviously the best would be to avoid temptation. 

I feel bad throwing water on the burning desire for new clubs, certainly most of us have had that desire.  As you said, discipline is key when managing financial concerns.

[Hacker James]

While I totally agree 100% with what has been said here, I wonder how many folks are in the same situation as myself. It sounds easy, if not noble,(or noble, if not easy) but given that the national average for FICO scores is 693  (mine is a bit higher and is considered a low "good"); it is hard to say what is the norm if people are truly honest with themselves. I applaud those who can, (well, I guess everyone 'can) manage their debt well, it just boils down to how much you are willing to deny yourself.