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How fast can I max out 112k? Barclay Closed account [Experiment]

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Kidcat
Established Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]

Why not get business credit?  If you pay everything off, and then use a large chunk of credit again, other creditors may get spooked.  At the beginning or a new business it's a good idea to cut your profit to help accelerate any debt payoff, so I would make large payments every month instead of the minimum, but I would not charge again on them while paying down.  I would use ROI and put that money back into the business vs. using credit card capital.  

 

No one here said it was life or death, but you asked for peoples opinions and they gave them to you.  If you want continued input it might help to realize that people took a minute or two to read your post and offer opinions.




Last app 09/21/2021. Gardening Goal Oct 2023
Message 11 of 18
NRB525
Super Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]

OP, I had $116k of open personal credit in 2009, and then the account closures and balance chasing began on nearly all lenders, Citi, Chase, BofA. However, the borrowings that I had were all on low APR, and I did not have the cash on hand to pay them all off. So I did not pay them of immediately, but rather never missed any payments.

 

If accounts were closed at low APR, I continued to pay them. If accounts were balance chased and still open, I continued to pay them. But I only paid minimums or slightly more than minimums. This resulted in some interest cost ( ok a lot of interest cost, sometimes $500 per month of interest) but also kept the borrowings going in the right direction, downward.

 

Given your likely business model, and that you are stashing the cash to be readily availble, I would not pay off any of the cards now. I would pay something more than the minimum payment, like 2x minimum, and realize that balance chasing from Barclays and AMEX is likely, but these cards are on 0% APR, and that has value to you for the 12 - 15 months or whatever the term is on the 0%, having that initial borrowing available.

 

Building up that cash, keeping that cash available, I would not open up any more accounts, I would not try to borrow more of the remainder of the credit limits, because at your utilization you've probably raised flags at all your lenders. If you start showing the ability to pay the amounts down, that will serve to stabilize the situation for the time being.

 

Just be prepared to pay the items at the conclusion of the 0% term, realize that is a hard deadline when this initial startup game concludes, and you need to look at the next phase. Ideally, your inventory turns will give you $100k or so of cash above what you owe on the cards, which then puts you in a good place to continue to obtain inventory, and likely then to obtain a business loan, after you have paid down the personal credit and have more of a track record.

 

The final note is, once you get through this first year and pay off all those items, these banks will be much more comfortable with your borrow / spend ability and much less likely to take AA. Since 2013, I've not had any more AA after paying down balances substantially to that point, and opened a number of new accounts in late 2014 and throughout 2015 with those lenders and more. So showing larger payments (when the 0% APR expires) will result in better, more stable credit, in the future after that pay down.

 

Let us know how it goes.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 12 of 18
Anonymous
Not applicable

Re: How fast can I max out 112k? Barclay Closed account [Experiment]


@NRB525 wrote:

OP, I had $116k of open personal credit in 2009, and then the account closures and balance chasing began on nearly all lenders, Citi, Chase, BofA. However, the borrowings that I had were all on low APR, and I did not have the cash on hand to pay them all off. So I did not pay them of immediately, but rather never missed any payments.

 

If accounts were closed at low APR, I continued to pay them. If accounts were balance chased and still open, I continued to pay them. But I only paid minimums or slightly more than minimums. This resulted in some interest cost ( ok a lot of interest cost, sometimes $500 per month of interest) but also kept the borrowings going in the right direction, downward.

 

Given your likely business model, and that you are stashing the cash to be readily availble, I would not pay off any of the cards now. I would pay something more than the minimum payment, like 2x minimum, and realize that balance chasing from Barclays and AMEX is likely, but these cards are on 0% APR, and that has value to you for the 12 - 15 months or whatever the term is on the 0%, having that initial borrowing available.

 

Building up that cash, keeping that cash available, I would not open up any more accounts, I would not try to borrow more of the remainder of the credit limits, because at your utilization you've probably raised flags at all your lenders. If you start showing the ability to pay the amounts down, that will serve to stabilize the situation for the time being.

 

Just be prepared to pay the items at the conclusion of the 0% term, realize that is a hard deadline when this initial startup game concludes, and you need to look at the next phase. Ideally, your inventory turns will give you $100k or so of cash above what you owe on the cards, which then puts you in a good place to continue to obtain inventory, and likely then to obtain a business loan, after you have paid down the personal credit and have more of a track record.

 

The final note is, once you get through this first year and pay off all those items, these banks will be much more comfortable with your borrow / spend ability and much less likely to take AA. Since 2013, I've not had any more AA after paying down balances substantially to that point, and opened a number of new accounts in late 2014 and throughout 2015 with those lenders and more. So showing larger payments (when the 0% APR expires) will result in better, more stable credit, in the future after that pay down.

 

Let us know how it goes.


ORIGINAL POSTER

 

NRB525, great advice and very balanced! Thank you for that my friend, very much appreciated!

 

Yes I'm most definitely planning to pay off all of these cards around month 9 (much before the end of the 15 month 0% APR period) just to avoid even being close to the 0$ APR deadline (gives me goospumps if I got too close to that deadline lol)

 

and yes, by the end of the 9 months I should have about 100k+ of capital above what I owe on the cards. That will be more than enough for me to never have to use personal cards for business again. I'm planning at that point to apply for a business credit card after my personal credit recovers since I've paid off this huge amount it should give a nice small spike to my personal credit score. 

 

My question is, since I am actively putting aside around 15-20k about every month in my CC vault, that 15-20k is money that I can start paying off the cards with today without impacting my business plan (I'm not saving it to accrue interest in the bank acount), so my options are:


1) Use that 15-20k to significantly bring down my credit card utilization from 90% to 80% then to 70% and so on every month and continue to decrease it to 0% slowly but 10-15% every time.

Note: Option 1 leaves me open to balance chasing. 

 

2) Keep the 20k in the CC Vault and only make the 2x minimum payments to avoid lenders balance chasing too quickly.

Note: option 2 makes it hard for them to balance chase too much and then I come in with FULL and COMPLETE payment from my CC vault in 9 months. 

 

We obviously don't know what lenders might think but would option 1 cool them down and let them know I'm more in control than option 2? I'm sure they have to be weighing that the card is 0% and that I have more than 12 months to pay it off before they start to take adverse action towards my account? What do you think?

Message 13 of 18
pipeguy
Senior Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]

OP: I owned and ran a business for 18 years as a SP (profitable for 16+ years) which means I used a lot of personal credit to float the business so I understand how you are floating funds. While I'm not going to get into your business plan or pass judgement on what you are doing, I'd just like to remind you that 15.3% of your "profit" need to go to the IRS for payroll taxes - both sides of SS/Medicare and this doesn't include any state or other income taxes.

 

Again, I'm not going to get into how to run a small business - I was doing $1m+ a year out of my home - just wanted to point out that cash flow is key, in addition to net profit vs gross profit. If and when it comes crashing down (for whatever reason) you will be personally responsible for all of it including IRS obligations - been there, it's not fun. 

Message 14 of 18
Creditaddict
Legendary Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]

Besides taking advantage of 0% APR's, I don't really see the point of sitting on the original money spent PLUS return on investment because savings accounts are pactically paying 0% also.

Why wouldn't you keep paying the credit cards in full and put the ROI into credit card stash each month until your credit card stash builds up to the amount of money upfront that you spend on a monthly basis and meanwhile get an Amex Charge card that will quickly allow you to charge that month on 1 card off your personal credit report on a monthly basis so that you don't CRASH your credit each month and have to continually deal with AA's and what not... take business spending off personal if at all an option... I get it sometimes small businesses have to go personal credit to get it done but it sounds like you have the cash flow that if you hadn't just tanked your score you should have got 10 business cards instead of 10 personal cards.

 

Take the money you have and wipe it all out and get your credit score to rebound and then start over and apply for only business cards, even if you have to PG them!

Message 15 of 18
CreditUnionFan
Valued Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]


@Anonymous wrote:

ORIGINAL POSTER

 

lol, I see you guys are all against the plan, no problem, I guess worst case scenario they shut down all of my cards, [edited as a thankyou to KidCat]. 

 

Another option is that I can pay everything off now, wait a week for the credit score to recover, and restart things but only use max 40-50% credit utilization. That's definitely a moderate approach that would make the banks happy also.... but don't see anyone recommending it for some reason?


I doubt that people would advise paying everything off and "restarting" because once the alarms have gone off at the lenders, there is little you can do to soothe their concerns. Paying them "all" off would likely just result in complete closure, or AA down to a very low limit. I'd stay the course with normal payments, perhaps more than what's owed, but not a drastic paydown. Any payments should be aligned with the APRs you're paying. 0% APRs get paid as slow as possible. Smiley Happy 

 

 

I was going to garden... Honest!
Message 16 of 18
Creditaddict
Legendary Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]


@CreditUnionFan wrote:

@Anonymous wrote:

ORIGINAL POSTER

 

lol, I see you guys are all against the plan, no problem, I guess worst case scenario they shut down all of my cards, [edited as a thankyou to KidCat]. 

 

Another option is that I can pay everything off now, wait a week for the credit score to recover, and restart things but only use max 40-50% credit utilization. That's definitely a moderate approach that would make the banks happy also.... but don't see anyone recommending it for some reason?


I doubt that people would advise paying everything off and "restarting" because once the alarms have gone off at the lenders, there is little you can do to soothe their concerns. Paying them "all" off would likely just result in complete closure, or AA down to a very low limit. I'd stay the course with normal payments, perhaps more than what's owed, but not a drastic paydown. Any payments should be aligned with the APRs you're paying. 0% APRs get paid as slow as possible. Smiley Happy 

 

 


No, I suggest a complete payoff and move to business credit as this is business spending!

Message 17 of 18
SouthJamaica
Mega Contributor

Re: How fast can I max out 112k? Barclay Closed account [Experiment]


@Anonymous wrote:

Hey guys,

 

So I'm a startup business owner who's spent the last year meticulously calculating my turnover time of my inventory and getting my retail business model to an art. The only thing holding me back was capital.

 

So I went out and signed up for 12 0% APR for 12-16 month cards and got a total of $112,000 in credit (all 0% APR for 12 months) 

 

Then I went to town and have spent about 80k total (about 71% utilization across all the cards).

 

 

Doesn't take a genius to know that this easily gets flagged as high risk behavior by the banks [on my end its not really high risk because as that inventory sells quick and if my ROI is about 30%, I will just continue to put aside about 10-15k monthly and reuse the rest and so I'm pretty much guaranteed to have all 112k before the 12-16 months ends of 0%].

 

Every month, I just make the minimum payments on ALL my cards, and the 10-15k, I stash it in a separate bank account appropriately named "CC Vault" that I am going to let build up to my 112k credit limit at that point effectively making my entire plan bullet proof. 

 

2 hiccups happened in my plan: Smiley Sad

1) BarclayCard decided to go head and run a credit report, saw how many cards were just opened and my utilization rate and closed my account (they still allowed me the 0% APR on the 3,800/5,000 balance that I had so not a total loss there]

 

2) American Express, again saw all of what was going on, and took down my credit line from the 20k that I had to the $14,500 that I had already charged on the card.

 

 

The account closure led me to think of a way to potentially make the banks a little happier, here are the two options I'm debating:

1) Make large CC payments monthly from my CC Vault account 

-I could easily do this without causing me to lose out on business ROI because the money is sitting in my vault and that's money I will use to pay off the CC's anyways so I don't lose out on anything and the banks get large payments monthly (eg: off of a 20k maxed out AMEX credit limit, I pay off 5k monthly, then max it out again, then pay 5k again etc rather than the small $200 minimum payment)


or 2) Just keep them all maxed out and just pay the minimum payments monthly [to stop the bank from lowering my CC limit down to what I've spent so far] 

 

I'm just trying to think of ways to make them happy without paying off the balances (remember, they are all 0% APR until next June) so that I can get the maximum ROI gain in business by repeatedly using the capital. and I've only spent 80k so far, can't believe what's going to happen when my utilization rate on 112k goes to 99% Smiley LOL

 

 

Looking forward to reading what you guys think, 

 


I don't think you should be holding money in your 'vault', you should be paying the banks.

 

Don't think you can outsmart banks and make more money off their money than they do.

 

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 18 of 18
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