Mom offers daughter balance transfer deal

She'll pay off the card, but then wants to remove her as an authorized user


Opening Credits
Columnist Erica Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

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Dear Opening Credits,
I am a 28-year-old trying to get my financial world on track. My mom has been a big support in my life, and I am an authorized user on a credit card that she pays. I don't use it much because I have my own accounts. I do not have any student debt, only a car loan and a credit card with a balance of $2,400.

The interest rate on my credit card is much higher than the rate on the card that my mom and I share, and she desperately wants me to transfer the balance of my card onto the one we share. She being the main account holder would actually do the balance transfer. This way, my card balance would be $0 and she would take on this debt, then take me off the card as an authorized user -- kind of like a fresh start and a cutoff at the same time (a cutoff I really, really need and deserve.)

My big question is this: Is this sort of move wise for my credit or will it just look like I shifted my debt to somewhere else and then was relieved of it, which could lower my score? Currently, my credit score is around 750. Thank you for any advice!   -- Kristine


Dear Kristine,
What a mom you have! Her offer is incredibly generous, as she'd be assuming your debt plus a balance transfer fee of around $72. 

You have an excellent FICO score right now, as numbers in the mid-700s and above are considered to be in the highest category. Payment history is the most crucial factor in the way these scores are calculated, so you've probably paid any personal credit card and loans responsibly. Your mother must have done the same with the account that she's allowed you to share, too, as all the activity with it is appearing on both of your credit reports and so worked into your scores.

Additionally, the total debt you're carrying must be on the low side. Credit utilization is the second weightiest scoring factor. If you owe less than 30 percent of what you can borrow, you're doing great.

So what would happen if your mother paid off your debt with her card, and then removed you as the authorized user? That's an interesting question, but a little complicated to answer.  

Right now, you are reaping the benefits of having another person's well-managed account on your report. Presuming it has a high credit line, whatever balances you do have (including that car loan) appear minor in context. However, if you are removed as the authorized user, you will lose that credit history on your reports, leaving you with just your individually held accounts.

As long as your debt still fits within the ideal ratio of having at least 70 percent of your total credit line open, you should be fine. If not, your score will drop. Credit utilization takes into consideration all kinds of debts and revolving balances are calculated differently than installment loans. Since this information is proprietary, you can't get an exact calculation on your own, but if you concentrate on the "less owed/more available" idea, you should be fine.  

The other issue is not scoring related but has to do with how much you're spending on finance fees by hanging on to the debt, especially if you only pay the minimum. For example, if the card has a 29 percent APR, it would take you about 20 years and over $7,000 extra to be rid of it! So if you do decide to take your mom up on the deal, you'd save quite a bit of money. Creditors and credit scores would not know who paid it off, just that the debt is gone.

My advice is this: become totally independent. You do not need to be on your mother's account anymore, because you have your own. Thank her for allowing you to piggyback all this time and ask to have your name removed.

Use the credit card you own beautifully by continuing to pay it on time. If you don't accept her offer (the choice is yours), send as much as you possibly can to get the balance to zero quickly. With monthly payments of just $233 (even at the high estimated APR) you'd be debt-free in a year, and would pay less than $400 in finance fees. More, your credit scores would remain in the fantastic range, making you eligible for credit cards with better terms.

In fact, this type of activity would be so impressive to your current issuer that they may consent to lowering the rate to keep you as a customer. There's no harm in asking. Since a long history with a company also boosts a credit score, you'd be wise to stick with them. 

See related: How balance transfer cards help or hurt credit scores, 2015 Balance Transfer Survey: Offers more generous, but move fast

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Published: November 26, 2014

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