@enharu wrote:
@cashnocredit wrote:Amex has highly sophisticated consumer financial models. They are also built around the two differnt types of credit extension. Charge cards are for convenience. Credit cards are for carrying debt. If you have no history of carrying debt they have to depend on your (and others in CRA databases) payment history. Once you carry a balance, they can see how much you pay and that becomes a very good indication that:
1. You don't have significant cash savings though you may have 401k, etc. Almost nobody pays double digit interest rates while keeping money in a CD or savings account.
2. Income estimates are now more accurate because they can see exactly how much is carried. The amount of payment beyond the minimum is their key metric.
Consumers that always pay in full are difficult to make income estimates on. They may have lots of income or they may be drawing down savings. Over time they get more comfortable that they know the customer's general financial health.
I've a relatively thin, short history but have had 50k+ balances on my charge card and never a peep out of Amex. No chance in Hell I could do that with other cards. I don't have Amex CCs nor have I even signed up for pay over time. There is zero chance I will use it and the 10K MR points just doesn't interest me enough.
I agree for the most part, but it also depends on the individual.
Dragging a balance for just 1 month on a 20% APR card is just 1.67% interest. If your APR is lower, then the interest fee is even lower. It doesn't make sense to withdraw money from a CD / investment and suffer even more penalties just because you don't want to pay 1.67% worth of interests. It all depends which step you take ends up costing you more money instead.
Some people may just want to leave a balance for a month, or few months, just for liquidity. They may have better use for that money and make a better return than whatever the credit card company is charging. This is risky though, because if what they are doing goes bust, then it becomes ugly really quickly. But many people and businesses do that.
That being said, Amex is a lender that prefers payment in full. They are very risk adverse, so what you are doing is considered as the ideal behavior they want out of their customers.
How do they handle carrying a balance while on 0% promotional APR? Like charging something that is <10% of CL and paying it off over 2-3 months.
Hi OP, sorry for hijacking this thread!
@amit1326 wrote:Hi,
I just started my credit Journey one year back. Am Doing good with the help of this Forum.
4 months back I got Delta Amex with inital $ 5500 limit after 61 days I got it to 15000.
Before that CLI I got offer from Amex Green & got approved NPSL. Then last month I opened up one more new business & applied for Gold Amex & got that also approved for Gold Amex NPSL.
I use all cards good & pay full before even statment generation Date.
Last week I got a call from Amex asking about all details, I answered all what they asked. They even asked what other Business I have, I told everything.
Then she said she has hold all 3 cards & I have to send the form for Income Verfi.
Then After a while I again got a call from the same, Saying that they were easily able to verify my other business over Internet ( as my other business is ver well established) & they have no more HOLD on any card & I can use the card & Ignore the email & no need to send the Income forms.
My cards are all fine & iam using & paying as usual.
JUST WANTED TO KNOW IF ANYONE BEEN IN SAME SITUATION, AM I GOOD NOW? OR WILL THEY AGAIN ASK ME ANYTHING FOR ANY MORE REVIEW.
PLEASE ADVICE
THANKS
I'm glad everything worked out well for you. I would not worry about future FR's...if this one went well, it's more of an inconvenience that anything else. The best of luck to you.
