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Established Contributor
FloridaState12
Posts: 614
Registered: ‎08-24-2011

How common are CLD's?

I ask because I want to take advantage of my Citi card's 0% interest by making some large purchases and paying them off in a few months once I have the cash in hand. I'm kind of worried if I do this Citi may freak out and decrease my $4,000 CL, especially since I'm a student with limited income...then agian, I think, why would they give me the credit and intro APR if they don't want me to use it?

 

What worries me is I'll have to make small -near minimum- payments for probably two months, maybe 3, until I can really start to pay it down in large chunks. I WILL have it paid off completely before the intro period ends in May, that I am 1,000% sure about, but I'm just worried they'll see me running up the bill, paying minimums, and decrease or maybe even close my account. This account is less than a month old.

 

So can anyone offer any insight? Do you think a CLD is likely, or are CLD's pretty rare just in general? I'm fairly new to this whole credit thing so I'm not sure. Oh and the high balance won't be more than 50% ($2,000) of the total CL, so I won't be maxing it out or anything. 

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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: How common are CLD's?

I wouldn't worry about it.

 

What banks are hoping with 0% offers is:

  • If you're not already a customer, you'll open an account with them to take advantage of the offer.
  • Whether you're a customer now or not, they're hoping that you won't pay it back before the 0% is up, and then they can make some money off of you.

There were a lot of random CLD's going on 2-3 years ago, when the banks first got smacked by reality and started reflexively tightening up, but other than that, I really do have to say that the CLD's that I've read about since then have pretty much been triggered by something that the consumer did. Balances crept up, mad app-o-rama's, a new late payment on another account, etc. For better or worse, lenders are a lot quicker to shut people down these days without necessarily doing a lot of investigating beforehand. It's the financial version of shoot first, ask questions later.

 

Since Citi made you the offer, I would take it and not worry about it. BUT: do make sure that you control such things as reported balances on your other cards, don't app for a while, etc. They will doubtless be softing you, looking to see if you're just taking advantage of an offer, or if you're in deep water financially and grabbing credit wherever you can. Look boring and respectable, and let them move along. And for your own sake, have at least three-six months' worth of minimum payments stuck in a bullet-proof savings account somewhere, just in case.

 

And my apologies to anyone who has undergone a CLD who might be offended by what I wrote. It's a tricky world out there, and while we scramble around trying to stay afloat, things sometimes happen that are out of our control. And sometimes banks do CLD with no apparent reason, but frankly, I don't think it's nearly as common as people think. (Sort of like American Express F/R's.)

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Established Contributor
FloridaState12
Posts: 614
Registered: ‎08-24-2011

Re: How common are CLD's?

Thanks for the response! Yeah all of my other cards will be PIF, per usual. It'll just be this one card with a balance for a few months. 


Honestly, I think it would be pretty stupid to punish me if I take advantage of this...especially with them pushing this and their balance transfer deal. Why offer it if you're going to punish me when I use it? I just wanted to make sure I wasn't making some huge mistake by doing this. 

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sandsanta
Posts: 163
Registered: ‎11-09-2011

Re: How common are CLD's?

I'd recommend you not do what you're planning on doing.  Not because Citi will care- I did the same thing four years ago and got a 6k CLI, but because its very easy to continue making the minimum payment and run out of time.  The sticker shock you receive when you revert to a normal API and 4k of debt will ruin your year.


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Valued Contributor
clocktick
Posts: 1,603
Registered: ‎12-07-2008

Re: How common are CLD's?

[ Edited ]

Florida, I got my 1st Citi card in May and put large charges on it and carried a balance up until about a week ago (took advantage of the 0%).  I paid it off and then stuck another $1900 on it 2 days later.  I requested a CLI from $7400 to $10k and got it.  I don't think I'd worry about the other cards or CLDs.  I was doing this with another card simultaneously so had 2 large balances for months straight - no reaction from other creditors (these other creditors I paid in full).

11/30/08 TU 648 EX 672 EQ 656 JUNE 2014 TU 779 EX 764 EQ 721
Amex BCP $24.1K/Clear $8.5- Barclays LLBean $15k/Sallie Mae $12.5 -Cap One QS $4 - Chase Freedom $7.5/United $5k/CSP $20k/Ink- Citi DP $9.5/Dividend $13k/HHHx2 $15k/16.4/Reserve $4.5k Best Buy $1940- Discover IT $15k - Elan $8k GEMB Lowes $20k - Macy's $2k - Kohl's $800




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Established Contributor
FloridaState12
Posts: 614
Registered: ‎08-24-2011

Re: How common are CLD's?


sandsanta wrote:

I'd recommend you not do what you're planning on doing.  Not because Citi will care- I did the same thing four years ago and got a 6k CLI, but because its very easy to continue making the minimum payment and run out of time.  The sticker shock you receive when you revert to a normal API and 4k of debt will ruin your year.


I appreciate your concern, but I've got it covered. I already have it all worked out and budgeted appropriately. I'm pretty financially savvy for a 20 year old. :smileyhappy:

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Established Contributor
FloridaState12
Posts: 614
Registered: ‎08-24-2011

Re: How common are CLD's?


clocktick wrote:

Florida, I got my 1st Citi card in May and put large charges on it and carried a balance up until about a week ago (took advantage of the 0%).  I paid it off and then stuck another $1900 on it 2 days later.  I requested a CLI from $7400 to $10k and got it.  I don't think I'd worry about the other cards or CLDs.  I was doing this with another card simultaneously so had 2 large balances for months straight - no reaction from other creditors (these other creditors I paid in full).


That makes me feel better lol. Like said, it will be under 50% of the total CL and it will be paid off well before the 0% expires. I'm not at all worried about being able to pay it off...I was just worried about Citi seeing unusually high activity for a new account and punishing me in some way because frankly, as a 20 year old, generally speaking, I think a $4,000 CL is probably not very wise for most kids my age. I have restraint and common sense, but I know several people I would never even consider give that much credit to. :smileyvery-happy:

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New Contributor
sandsanta
Posts: 163
Registered: ‎11-09-2011

Re: How common are CLD's?

Famous last words :smileywink:.

 

You should be fine. 


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Current Score: Ex:716 Eq: 676 TU:701
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Valued Contributor
clocktick
Posts: 1,603
Registered: ‎12-07-2008

Re: How common are CLD's?

I think they'll be looking more at your payments and credit profile as a whole, versus your birthday.  :smileyhappy:

 

FYI - my balances were both over 50% for months straight.  When you pay it off, you may even want to ask for a CLI!

11/30/08 TU 648 EX 672 EQ 656 JUNE 2014 TU 779 EX 764 EQ 721
Amex BCP $24.1K/Clear $8.5- Barclays LLBean $15k/Sallie Mae $12.5 -Cap One QS $4 - Chase Freedom $7.5/United $5k/CSP $20k/Ink- Citi DP $9.5/Dividend $13k/HHHx2 $15k/16.4/Reserve $4.5k Best Buy $1940- Discover IT $15k - Elan $8k GEMB Lowes $20k - Macy's $2k - Kohl's $800




Starting Score: 648
Current Score: 736
Goal Score: 765


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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: How common are CLD's?

Just as a general observation, the best way to use a 0% offer, whether on initial purchases or on BT's, is to have the money in the bank available to pay it off at any point, while still making the payments necessary to bring down the balance.

 

Where people get in trouble is when they don't have the money now, or anywhere close to it, and they start relying on magical thinking to figure how they'll pay off the balance before the 0% ends. And of course, that's what the banks are hoping will happen --that they'll wind up getting some interest after the promo period ends.

 

A cautionary note: AFAIK, Citi isn't one of them, but there are lenders out there who will retroactively charge interest on the entire original balance if you don't pay it off before the end of the promo period. So even if you borrowed $10K and you only owe 20 bucks when the 0% is over, they'll charge you interest on the whole $10K. Read the fine print. :smileywink:

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

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