Credit Card Minimum Payment Ever Really Okay?!?

[elim]

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@Bman70 wrote:

Credit Card Minimum Payment Ever Really Okay?!?

Sure why not? It's the minimum payment set by the bank. I made minimum payments frequently over the last two years on my BofA, since I was focusing on paying off other cards. I kept it near 90% most of that time. Then I changed my habits (gasp) and began to make huge payments. Now it's at 0 balance and they love me. Theyre sending me reams of BT checks every week lol. And prequals for new cards. Going for a CLI soon too. Not sure I understand all the paranoia around credit cards, I swear I've never had a single adverse feedback and I've just used my cards as I wanted to. Carrying high balances, radical pattern shifts, sudden payoffs, everything. Just CLIs and love.

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   so many different opinions. i like this one the only thing i can say about paying the minimum is... we did it for months (after business shut down and divorce) on a handful of maxed out cards just before we murdered our credit during the recession.

i hope i'll never have to again.

[BluePoodle]

I usually more than one payment during a billing cycle. So the first payment may only be the minimum but then I make a second payment which is more. I almost always make at least two payments before each payment due date or statement cut date.  It just depends on how much spend I have put on a particular card in any given month.

[Revelate]

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@longtimelurker wrote:

My guess is that in the larger (non-FICO-obsessed) population, among the roughly 50% that carry a balance, it will be pretty standard behaviour to pay the minimum.   I think that is why the recent requirement (part of the CARD Act?) to add to the bill statements about how much and how long it would take to pay off if you just pay the minimum.

People, somewhat strapped for cash, won't pay more than is strictly necessary on each bill, even if that led to greater savings later on.   Same with mortgages, though you can pay more, and it may make sense to (depending on prevailing rates) just making the standard payment is enough for most.

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Ah, excellent point: would suggest it's the suboptimal half of the population to be in even from the lender's perspective, but it's not like it's killing puppies bad, or even anywhere cloe to it. Thank you for making it.

[DaveSignal]

I don't think paying the minimum will set off any flags with the lender.  This is really all that is required to be paid, and if it is, then the obligation has been met.

If later, you are looking for a CLI or another account with the same lender, however, they will probably look back at the payment history and may not approve the request, due to the fact that balances are not being paid off on the current card at its current limit.

[longtimelurker]

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@DaveSignal wrote:

I don't think paying the minimum will set off any flags with the lender.  This is really all that is required to be paid, and if it is, then the obligation has been met.

If later, you are looking for a CLI or another account with the same lender, however, they will probably look back at the payment history and may not approve the request, due to the fact that balances are not being paid off on the current card at its current limit.

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Well, when apping for another card, it might still be OK, as your account is in good standing.  Just you may not get the best limit or APR, but I think the details of an OK payment history will only matter if you are borderline for other reasons.

[DaveSignal]

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@longtimelurker wrote:

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@DaveSignal wrote:

I don't think paying the minimum will set off any flags with the lender.  This is really all that is required to be paid, and if it is, then the obligation has been met.

If later, you are looking for a CLI or another account with the same lender, however, they will probably look back at the payment history and may not approve the request, due to the fact that balances are not being paid off on the current card at its current limit.

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Well, when apping for another card, it might still be OK, as your account is in good standing.  Just you may not get the best limit or APR, but I think the details of an OK payment history will only matter if you are borderline for other reasons.

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I mentioned it because one common reported denial reason for Amex CLI is:

One or more payments received in the past 12 months on your American Express account were too low given the outstanding balance and repayment history.

This denial reason has been used, in some cases, for cardholders who have paid less than the full statement balance.

[TheFate]

Paying the min payment is fine a few times here and there. But if you carry a high balance and only pay the min don't think about asking for a CLI as they will deny you.

Take advantage of your No interest promo, those only come once on each card so use it to your advantage.

Like others have stated, if you have a promo for 12 months no interest... try to aim at paying it off in 10-11 months. For example I just charged $600 on my GE card. The min payment is only $25 but if I only pay that each month it will result in paying interest. But if I pay $60 each month I'll pay it off in 10 months which looks a lot more responsible to the lender which will usually result in a CLI.

[physicist82]

Until we started watching our balances very closely for our mortgage loan, we only paid the minimum amount most of the time. 

Usually we pay our credit cards off completely at tax time (or when I get the money from my university each semester). Then we would use the cards to cover various things throughout the year, like when we go back to Florida to visit family, or if we go on a trip international, or if we go on a domestic trip and get a rental car. On our non store cards we have generally had pretty small credit lines, (500,750,1000,3500) When we start out fresh after paying them all off at tax time usually we pay them off or more than the minimum payment when its smaller things. By the time the latter half of the year gets here and we are buying school clothes/supplies for the kids, their birthdays are in Aug and Nov, Christmas the cards get closer to their limits and we usually carry maxed out until we pay them off again during tax time. The last 3 or so months of the year are the hardest for us to stay within budget for some reason. 

Usually if we pay something off we snowball for a couple of months using that payment to pay extra on another card but it generally doesn't last very long because something always comes up. Like for example at the end of last year our van broke down, it threw a rod. We had just paid off our highest limit card (3500). We had about half the amount lying around in cash (2000) which we paid upfront, and then we paid the other 2200 on the card once the engine was replaced. 

We don't mind paying across a few months even with interest for a trip, because we are firm believers in making sure we and the kids have good family experiences now rather than always trying to save up money to go somewhere and then life's million hiccups taking that money away and never getting to do anything. Especially since we are pretty frugal and we can make a week long intl trip cost 1000 or less depending on where we are going.

Of course only 1 of our cards was a rewards and it was a minimal 1% cash back. Now that our Cap1 cards are QS I have been making a point to use it for everything and paying it multiple times a week/month. Otherwise we negate the benefit of the cash back. 

We also like to utilize the best buy rewards program by taking advantage of the 0 percent financing on big purchases. 

The point of explaining our credit behavior is to say that we have never gotten adverse action for paying the minimum on a card even if we only paid the minimum for like a year. And we have never gotten adverse action for paying them off in large amounts when we get the extra money. It might be because they see the same pattern every year from us but I don't think so. The only adverse action we have ever gotten is that Toys R us closed my card because we didn't use it enough anymore since there isn't one really close to us, and we had our discount tire card give us an auto CLI that tripled the limit but since we never used that high limit and only buy tires once a year or so they didn't like that we didn't use it enough so they lowered it back down to 500. Who needs 1500 for tires anyways?

[physicist82]

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@DaveSignal wrote:

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@longtimelurker wrote:

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@DaveSignal wrote:

I don't think paying the minimum will set off any flags with the lender.  This is really all that is required to be paid, and if it is, then the obligation has been met.

If later, you are looking for a CLI or another account with the same lender, however, they will probably look back at the payment history and may not approve the request, due to the fact that balances are not being paid off on the current card at its current limit.

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Well, when apping for another card, it might still be OK, as your account is in good standing.  Just you may not get the best limit or APR, but I think the details of an OK payment history will only matter if you are borderline for other reasons.

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I mentioned it because one common reported denial reason for Amex CLI is:

One or more payments received in the past 12 months on your American Express account were too low given the outstanding balance and repayment history.

This denial reason has been used, in some cases, for cardholders who have paid less than the full statement balance.

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Cap1 uses that excuse as well. It doesn't matter how many times a year we pay it off in full. When we carry a balance on it we usually only pay the minimum, so that was sited as our reason. (EO raised it anyways but that's what the cli button said)

[gdale6]

I have had no problem with a minimum payment here or there, it sometimes is necessary when cash flow is not at a good flow, have had no ill effects from it. I would not make minimums month after month though that may be a flag to them that you are having financial problems, they do like to be paid in full every once in awhile.