A Serious Personal Finance Question

Calling all you finance geeks. I have a “friend,” *cough*, who is using a balance transfer credit card with a long zero-interest introductory period to freeze the interest on some debt and aggressively pay down the principal over the next year or so. He is seeking advice.

He’s gonna be smart about this and do things like not use the transfer card for any purchases, and not use the other cards going forward for anything he can’t pay off in one month. He is disciplined enough to do this. Here’s his question with context.

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He has 60 days to transfer balances with no fees and no interest until 2018. The limit on the transfer card isn’t quite enough to absorb all the debt he’s trying to close out, but will cover most of it, and we’re not talking about a huge amount of money. He’s already consolidated two accounts and the transfer card is at 89% utilization. He stopped there because credit agencies consider a card that’s at 90% maxed out.

1. So does he pay down as much interest-bearing debt as he can in the next billing cycle, then go ahead and max the transfer card completely out just before the 60-day window closes?

2. Or is he better off stopping with the transfer card at 89% and working from there?

I’m leaning toward telling him to take the transfer card to 100%, because he’s done applying for credit until next summer at the earliest. Credit utilization is a huge factor in credit scores, but it’s just a monthly snapshot. Not tracked over time. This is why paying down 50% of your debt in one go is one of the quickest ways to improve your score, and why running up a bunch of credit cards in a short period of time is one of the easiest ways to damage your score.

I’m only leaning, and I’m not an expert, so I am interested to know if anyone else has better advice.

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