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How to apply credit card payments

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Anonymous
Not applicable

How to apply credit card payments

Hi folks,

 

I am new to the forum and have enjoyed the information I have read.  I am in a quandry and need some advice.

 

through 8/2010 I only had 1 revolving CC, HSBC w/67% utilization ($1495/$2190CL).  I applied in 8/2010 for a City Platinum Plus, Approved for it CL $1600. Incurred $127 in charges, they posted for August statement.  I applied 9/2010 for an AMEX Blue, approved, $2000 CL.  Card not received yet. Pulled my Equifax 9-18, FICO 737 w/utilization on Citi @ 8%.  Charged additional $370 in addition to $127 since August statement, util now 31% I believe.  Updated score 9-24.  Score dropped to 716.  Equifax states the reason for the drop is utilization up by $370 (from $127) to approx $500.    I also set up a recurring charge on the Citi card through December 2010 for $45.  I planned to pay Citi $90 this month, in part to offset the recurring payment of $45 (through December 2010).  and HSBC $75 (since damage is already done on HSBC). 

 

Can anyone help me figure this out.  I am upset about  what I have done.

 

Thanks

Message 1 of 10
9 REPLIES 9
haulingthescoreup
Moderator Emerita

Re: How to apply credit card payments

 


@Anonymous wrote:

Hi folks,

 

I am new to the forum and have enjoyed the information I have read.  I am in a quandry and need some advice.

 

through 8/2010 I only had 1 revolving CC, HSBC w/67% utilization ($1495/$2190CL). 

 

I applied in 8/2010 for a City Platinum Plus, Approved for it CL $1600. Incurred $127 in charges, they posted for August statement. 

 

I applied 9/2010 for an AMEX Blue, approved, $2000 CL.  Card not received yet.

 

@Pulled my Equifax 9-18, FICO 737 w/utilization on Citi @ 8%. 

 

Charged additional $370 in addition to $127 since August statement, util now 31% I believe.  Updated score 9-24.  Score dropped to 716.  Equifax states the reason for the drop is utilization up by $370 (from $127) to approx $500.   

 

I also set up a recurring charge on the Citi card through December 2010 for $45.  I planned to pay Citi $90 this month, in part to offset the recurring payment of $45 (through December 2010).  and HSBC $75 (since damage is already done on HSBC). 

 

Can anyone help me figure this out.  I am upset about  what I have done.

 

Thanks


Hi, hope you don't mind; I broke up your post into paragraphs to make it easier to read. When a question is complicated, white space helps. Smiley Happy

 

 

through 8/2010 I only had 1 revolving CC, HSBC w/67% utilization ($1495/$2190CL). 

 

I applied in 8/2010 for a City Platinum Plus, Approved for it CL $1600. Incurred $127 in charges, they posted for August statement. 

 -- OK, so that's 8% util on the new Citi; 43% total util.


I applied 9/2010 for an AMEX Blue, approved, $2000 CL.  Card not received yet.

 -- Is it showing on your reports yet? (probably not) It won't help total util until it pops up with the $2K CL.

 

@Pulled my Equifax 9-18, FICO 737 w/utilization on Citi @ 8%. 

 

Charged additional $370 in addition to $127 since August statement, util now 31% I believe.  Updated score 9-24.  Score dropped to 716.  Equifax states the reason for the drop is utilization up by $370 (from $127) to approx $500.   

 -- So the new balance has posted in addition to the original? (I hope to heaven that you made at least a minimum payment on the $127!) I agree; sounds like 31% on the Citi, and total util at 53%, assuming that the new AmEx is not yet reporting.

 

I also set up a recurring charge on the Citi card through December 2010 for $45.  I planned to pay Citi $90 this month, in part to offset the recurring payment of $45 (through December 2010).  and HSBC $75 (since damage is already done on HSBC).

 -- My I ask, why aren't you paying your cards off in full every month? Make it a policy to never, ever carry balances, unless you have some killer APR deal going on, or the you-know-what has hit the fan. And to avoid the second scenario, never charge what you don't have the money in the bank to pay off, and have an emergency fund to make minimum expenses (mortgage/rent, food, utilities, minimum payments on CC's, etc etc) for as many months as you can.


I may well have misunderstood what you posted; if so, I apologize. But it is never necessary to carry balances to somehow please a credit card company.


Can anyone help me figure this out.  I am upset about  what I have done.

 -- Well, you haven't really done anything yet. You have allowed high balances to post on your cards, and that will be turned around (assuming you have the money to pay) by paying off your cards in full.

 

Now that you have three CC's, stop adding more for a while. Three is all you need to establish great credit history. (Those of us who had negatives in the past often opened more to "dilute" the negative history, but it adds extra hassle.)


If you allow balances to report to the credit bureaus, your scores will drop accordingly, even if you immediately pay them off. Your Citi and AmEx cards will report the balances that are on your statements. Your HSBC card, if it's a bank card (not the Best Buy store card), will report the balance on your account as of the last business day of each month, although they will delay sending in the new balance by a week or so.


Most of us find that our scores do best if we only allow one CC to report a balance. Note that word "allow" --you need to control your credit in such a way that you determine what goes on your credit reports. If you're trying for the best score possible, I would suggest that in the future you pay off your HSBC balances and your AmEx balances before they report (see above paragraph for when they pick the balance to report.) This will result in their reporting a $0 balance. I mention those two because they are a bit squirrelly in reporting and there's a delay in turning around reported balances. Let some minimal amount report on the Citi card, maybe your recurring $45 charge, pay everything else off online 4-5 days before the statement date, let the statement post with the $45 balance, and then pay the $45 before the due date. That is absolutely critical, and it's easy to forget!!!


I'm concerned that it seems that you didn't pay down the $127 from your first Citi cycle. You must pay at least the minimum every month on every account before the due date, or you're going to incur late fees, and lates on your credit reports if you delay too long. So make sure to pay them now, before your current due date.


I'd say that right now, here are your priorities:

  1. Make sure that you are current with Citi. If you have missed a deadline, call up and grovel. Apologize, apologize, and beg that they don't report the late to your credit reports. Cheerfully accept a late fee if it means that they won't report the late. (Again, if I misunderstood, I apologize.)
  2. Keep the recurring charge on the Citi card, but otherwise don't charge anything new for a while, until you're untangled.
  3. No new (increasing) debt until you have your HSBC card paid off entirely.
  4. Once you owe nothing on your CC's, start to use them strictly for convenience and for rewards, using them for things you have to get and would pay cash for anyway, like gas and groceries, or for killer deals that you have the money in the bank to pay off as soon as the charges pop up on your online account.

I may well have gotten hold of the wrong end of the stick in what you're asking. Please untangle me (us) if so. Smiley Tongue

* 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
Message 2 of 10
haulingthescoreup
Moderator Emerita

Re: How to apply credit card payments

I'd like to add that this sounds a bit lecture-y, and I didn't mean it to be. But I couldn't tell for sure how you were handling your payments, and my mom button got pushed, I think. Smiley Wink

* 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
Message 3 of 10
vanillabean
Valued Contributor

Re: How to apply credit card payments

Can I ask what you're upset about? The damage of a high util is temporary.

 

Message 4 of 10
Anonymous
Not applicable

Re: How to apply credit card payments

Hello haulingthescoreup!

 

Thanks for responding, I really appreciate it.  Your response was not lecture-y at all.

 

Through 9-24  Amex Blue is not showing on my reports yet.    My Citi did show in August w/the $127 and in September with the approx $500 amount.  I made a $40 payment.  The minimum requested was $20, but the recurring payment of $45 did hit on the September statement.  I should have paid the $127 off on the Citi, but didn't.  I have 0% APR through 10-2011 on the Citi and 0% APR on the Amex through 3-2011.  I have planned to purchase major items during this 0% APR time.  I have projected with me purchasing the major items for my household, both Citi and Amex will be paid off in April and May of 2011.  It seems I will be carrying a balance and making much larger payments to do this until April or May.  It is better than financing my appliances.  I will be directing all available extra to HSBC (not Best Buy) above the larger scheduled payments.  I don't foresee paying HSBC off this year.  I don't foresee it, it may happen. 

 

This is bad because HSBC has a 14.99% APR on the money, and it is killing me.  But again, it will get a much larger than usual minimum and I will not charge ANYTHING to it until it is paid in full.  The card is in a drawer.  In fact, all are at this time, with me intending to charge only the items I have decided to purchase on them, nothing more, with me having projected paid-in-full on the Citi and Amex in April and May with these items only being charged.  0% APR.  It seems to be an optimal time to get the appliances, spacing between the Citi and Amex. 

 

I hope I have given insight in my thinking.  If you see holes in my thought process, please respond.

 

Thanks. 

 

Message 5 of 10
Anonymous
Not applicable

Re: How to apply credit card payments

Hi my-own-fico,

 

Thanks for responding.

 

I was upset about killing my credit score.  I worked so hard to get it to 735.  It ws shocking to see it drop 16 points in one month, that's all.

 

 

Message 6 of 10
vanillabean
Valued Contributor

Re: How to apply credit card payments

 


@Anonymous wrote:
This is bad because HSBC has a 14.99% APR on the money, and it is killing me.

 

1495 * 14.99 / 100 / 12 = $18.68 in interest. As you pay down every month, it'll be less.

 


@Anonymous wrote:

Hi my-own-fico,

 

Thanks for responding.

 

I was upset about killing my credit score.  I worked so hard to get it to 735.  It ws shocking to see it drop 16 points in one month, that's all.


 

The good thing is the points will come back as you pay down the card! There's no history involved in that respect.

 

Message 7 of 10
Anonymous
Not applicable

Re: How to apply credit card payments

Hi my-own-fico,

 

Thanks for the encouragement about HSBC. 

 

I do want to ask what is your input on my posting to hauling-up-the score?

 

Thanks.

Message 8 of 10
haulingthescoreup
Moderator Emerita

Re: How to apply credit card payments

 


@Anonymous wrote:

Hello haulingthescoreup!

 

Thanks for responding, I really appreciate it.  Your response was not lecture-y at all.

 

Through 9-24  Amex Blue is not showing on my reports yet.    My Citi did show in August w/the $127 and in September with the approx $500 amount.  I made a $40 payment.  The minimum requested was $20, but the recurring payment of $45 did hit on the September statement.  I should have paid the $127 off on the Citi, but didn't.  I have 0% APR through 10-2011 on the Citi and 0% APR on the Amex through 3-2011.  I have planned to purchase major items during this 0% APR time.  I have projected with me purchasing the major items for my household, both Citi and Amex will be paid off in April and May of 2011.  It seems I will be carrying a balance and making much larger payments to do this until April or May.  It is better than financing my appliances.  I will be directing all available extra to HSBC (not Best Buy) above the larger scheduled payments.  I don't foresee paying HSBC off this year.  I don't foresee it, it may happen. 

 

This is bad because HSBC has a 14.99% APR on the money, and it is killing me.  But again, it will get a much larger than usual minimum and I will not charge ANYTHING to it until it is paid in full.  The card is in a drawer.  In fact, all are at this time, with me intending to charge only the items I have decided to purchase on them, nothing more, with me having projected paid-in-full on the Citi and Amex in April and May with these items only being charged.  0% APR.  It seems to be an optimal time to get the appliances, spacing between the Citi and Amex. 

 

I hope I have given insight in my thinking.  If you see holes in my thought process, please respond.

 

Thanks. 


 

Hi, I've been enjoying my weekend! Sorry for the delayed response.

 

It sounds like you understand the smart way to use credit (for convenience, to handle big expenses.) So I now get to calm back down. Smiley Very Happy

 

The one thing that I'd comment on is that it sounds like you've done some financing on AmEx. Nothing technically wrong with that, but even with their revolvers (Blue, Blue Cash, Delta Gold, Clear, etc.), AmEx does get nervous if you carry a balance beyond 3 months or so, despite their 0% offers. So in your repayment schedule, you might want to tilt the bulk of the bucks toward AmEx, with minimum plus a little more on the others, until AmEx is paid off. One thing that AmEx sometimes does to new members is suddenly call you in and request that you produce every financial document you've had in the last 5 years, the infamous FR (financial review.) Smiley Tongue

 

Might be smart to pay them off ASAP and then shift to a regular payment schedule with the other two. Smiley Wink

 

Oh, and a useful thing to do while carrying balances is to go to each CC website and set up an automatic payment for the minimum (I'd recommend the minimum + $10 if that option exists) to be paid by the due date. It's surprisingly easy to lose track of what is due when to whom, and this will cover you. Just be sure to have enough in your checking account to meet all three minimums at any time.

* 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
Message 9 of 10
vanillabean
Valued Contributor

Re: How to apply credit card payments

I certainly agree with hauling in meeting all minimums at all times. And yes, Amex can get nervous the first few months. But you have 0% APR on citi for some time, so some household purchases look ok there. Here are some scenarios.

 

Now:

hsbc 1495 / 2190, citi 500 / 1600, amex 0 / 2000

69% 32% 0%, overall util 35%

 

Let's say you can do this before more purchases:

hsbc 1050 / 2190, citi 400 / 1600, amex 0 / 2000

48% 25% 0%, overall util 26%

Could go up 10 points.

 

Let's say you make some household purchases and continue to pay some down:

hsbc 825 / 2190, citi 750 / 1600, amex 0 / 2000

38% 47% 0%, overall util 28%

Could drop a few points.

 

In half a year maybe:

hsbc 180 / 2190, citi 140 / 1600, amex 0 / 2000

9% 9% 0%, overall util 6%

Could go up 30 points.

 

Or:

hsbc 0 / 2190, citi 300 / 1600, amex 0 / 2000

0% 19% 0%, overall util 6%

Which is good as well.

 

The above assumes all cards report their credit limits. It would be good for you to get a fresh EQ score report at the right time to see what the listed overall util is. You'll be able to tell if say the citi card reports its credit limit or not and its high balance or not. These are key data.

 

Once you get the util calculation clarified, you'd know how far it would be sound to stretch each of the cards.

 

You should view the above as entertainment, not as expert advice. Smiley Wink

 

Message 10 of 10
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