Credit Balances

[Anonymous]

I have overpaid on a few cards.  Does carrying a credit balance on a card work against me?  (This is my first posting-be gentle with me please.)

[score_building]

not w/ respect to your credit score but there are better ways to invest your money

Message Edited by score_building on 10-09-2008 12:45 AM

[haulingthescoreup]

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lilac123 wrote:
I have overpaid on a few cards.  Does carrying a credit balance on a card work against me?  (This is my first posting-be gentle with me please.)

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No, it will generally just report as $0, at least, that's what mine seem to do. HTH

Welcome to the forums, btw! We're generally reasonably kind around here, unless you're an American Express rep or something.

[jmbfl]

I always have a credit balance on PedFed at the time when it reports, and it always reports a zero. I don't think the CBR systems can handle numbers less that zero. My understanding is that the CCC's are not very fond of credit balances, and if you let a credit balance sit there long enough they will usually refund it automatically. (Remember, on their book a balance on your CC is an asset and a credit balance is a liability!) That being said, if you let a couple bucks of overpayment sit on a CC account for a few weeks until you use it up no one is going to care! (There are also occassions where you have to pump up a credit balance on a low CL account as a workaround. That is OK, too. Just don't let it sit out there real long.)

[Anonymous]

Does carrying a credit balance force a card to report and does it count as activity (for FICO scoring, at least)?  I have a number of credit cards and I don't want any of them closed due to inactivity, so try toI charge one purchase a month on them and then pay it right away, so they report $0.  However, I have two cards with a credit balance.  Am I correct in thinking that they are indeed reporting something each month, as opposed to not using them at all and they don't report anything at all? 

I suppose the CCC could always close the card anyway when/if they refund the credit balance, but we are talking about $11 on one card (it was $20 but I accidentally let something get charged to it (myFico.com, in fact)) and $1 on another card which I really don't plan on ever using again.... Will having that $1 credit keep them reporting even if I never use the card again?

[haulingthescoreup]

No, keeping a card active and reporting balances to the CRA's are two different things.

If a card is used at some point during the month, but continually reports at $0, it is not considered inactive, either by the bank (so they aren't going to close it) or by the FICO scoring formula (so you shouldn't get the haven't used in a while ding.)

The only time I've gotten the ding for a slumbering card awakening is on my J.Crew card, which really does only get used every 4-6 months. When one of my regular cards suddenly reports a balance, I haven't gotten that ding. (As always, though, YMMV.)

Also, when banks are reviewing your usage patterns, they don't care what gets reported. They're looking at how much you run through that card every month. Now they might also be looking at whether you PIF or carry balances, but the $0-on-a-statement thing is a score issue. hth

[Anonymous]

My question is does having a credit balance keep the card active, or is having a credit balance and no activity for several months no different than having a $0 balance and no activity?  Basically, I am hoping that a credit balance might be a way to keep a card "active" (for the bank's purposes) without using it.

If the CCC decides to automatically refund the credit, does the refund count as activity, and is that a signal that it was about to become dormant?

[oracles]

Hi Mike

Having a credit balance does not constitute activity on the card. You are not using the card for anything.

If you had a balance on the card and paid the monthly minimum or over the minimum fee, then that constitutes having activity.

With a credit balance, you are not doing anything with the card. You are not paying nor using the card. It can still become inactive. Also they will refund the money to you after a period of time.

I am trying to find the NY Times article I read months ago regarding this particular situation. unfortunately i can not find it, however you can do a search on it.

Hope this helps

[Anonymous]

So much for the $1 credit balance I purposely put on my wife's New York and Co card.  It will probably never be used again.  She doesn't shop there anymore, and I only woke it up so it would report some positive information to counter some of the negative.

[MidnightVoice]

Don't forget, if you don't pay interst, then the only was a Credit Card company makes money off you is via a percentage of the purchases.  So if you leave a card at zero or less and do not use it, they are making zero income and they do not like that