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Established Contributor
andre181
Posts: 627
Registered: ‎07-29-2010
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Re: Overpay...


pozativelyliving wrote:

I just had an idea, what do you guys think of this - I have a Walmart card with a $600.00 limit. I'd like to use their 0% financing offer for 18 months to purchase an iPad (just over $700.00). What if I pay my current balance ($65.00) PLUS pay an additional $200.00. I should have $800.00 available ($200.00 of that a credit) then I can put the whole iPad on their and be good to go. Sound like a plan?


You could probably do that or you could just pay $600 on your Walmart card and the rest in cash or another card.

Discover IT $25K | FNBO Visa $22K | Citi Forward $14.5K | US Bank Cash+ Visa Sig $15K | Priceline/Barclays $10K | Chase Freedom $10.5K | Amazon/Chase Visa Sig $8.3k | Citi Double Cash $6.5K | BoA Cash Rewards 1-2-3 Sig $7.5K | Sallie Mae World MC/Barclays $5K | Capital One Cash Rewards $5K | Commerce Bank $5K | WF Cash Back Visa $3.6K | Amazon/GEMB $2.5K | Younkers/Comenity $2.4K | AMEX BCE $2K Target $1K | AMEX Green
EX FICO (from AMEX): 754, TU08 FICO (from Discover): 755, AAoA: 3.6 years
Frequent Contributor
7PM789
Posts: 257
Registered: ‎08-20-2012
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Re: Overpay...

I pay my Amex and Discover by check because from what I've read my charge card isn't factored in to my utilization and with my current limit on the Discover card (designated gas card until I qualify for the penfed card) I can reach the $1,500.00 cap without exceeding 20% each of the 3 months gas is the rotating category and I pay my mastercard at my credit union. This allows me to make a little extra interest (not much but it all adds up) on the money that would otherwise be tied up making multiple payments throughout the month. When I started out with a $500.00 secured card I would make multiple payments each month but now that I have ten times the "hard limit" I started with I just manage my utilization never allowing any card to exceed 30%
Amex B.C.E. - $2.5k - N.C.F.C.U.M.C. - $5k - Amex Gold - NPSL - Discover More - $7.5k - Sam's Club Discover - $10k -
Walmart Discover - $7.5k - Citi T.Y.P. - $5.5k - Chase Freedom - $2.2k -
W.M.TU-775(July/14/) EQ-726(July/12) EX-753(Jan/13)
Audi, Vide, Tace. . .


Established Contributor
andre181
Posts: 627
Registered: ‎07-29-2010
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Re: Overpay...


Jlu wrote:
Walmart doesn't let me overpay on their website although I've had no experience with sending them a physical check.

"Push" the payment from your checking accounts bill pay service if you have it. Then you can pay as much as you want.

Discover IT $25K | FNBO Visa $22K | Citi Forward $14.5K | US Bank Cash+ Visa Sig $15K | Priceline/Barclays $10K | Chase Freedom $10.5K | Amazon/Chase Visa Sig $8.3k | Citi Double Cash $6.5K | BoA Cash Rewards 1-2-3 Sig $7.5K | Sallie Mae World MC/Barclays $5K | Capital One Cash Rewards $5K | Commerce Bank $5K | WF Cash Back Visa $3.6K | Amazon/GEMB $2.5K | Younkers/Comenity $2.4K | AMEX BCE $2K Target $1K | AMEX Green
EX FICO (from AMEX): 754, TU08 FICO (from Discover): 755, AAoA: 3.6 years
Frequent Contributor
7PM789
Posts: 257
Registered: ‎08-20-2012
0

Re: Overpay...

[ Edited ]

pozativelylivin g wrote:

" I just had an idea, what do you guys think of this - I have a Walmart card with a $600.00 limit. I'd like to use their 0% financing offer for 18 months to purchase an iPad (just over $700.00). What if I pay my current balance ($65.00) PLUS pay an additional $200.00. I should have $800.00 available ($200.00 of that a credit) then I can put the whole iPad on their and be good to go. Sound like a plan? "

 

I have no experience with a walmart card but I have done something similar in the past to buy an item priced beyond my cards purchasing power. I paid in full before I made the purchase allowing the credit to post to my account. Although I wouldn't want to max a card out (90% Utilization or above) if you plan on carrying a balance to take advantage of the 0% interest because that will hurt your credit score.

Amex B.C.E. - $2.5k - N.C.F.C.U.M.C. - $5k - Amex Gold - NPSL - Discover More - $7.5k - Sam's Club Discover - $10k -
Walmart Discover - $7.5k - Citi T.Y.P. - $5.5k - Chase Freedom - $2.2k -
W.M.TU-775(July/14/) EQ-726(July/12) EX-753(Jan/13)
Audi, Vide, Tace. . .


Regular Contributor
pozativelyliving
Posts: 237
Registered: ‎07-13-2012
0

Re: Overpay...

Not to concerned with my score in the short term (well, a small decline). I took a hit with inquiries and new accounts being opened.Utilization will be kept low. I guess using multiple payment sources will be the best way to go. I'll have to inquire about that before making the purchase to insure that it's allowed with the offer. 

EX 638 (Lender 9/1) TA 650(Walmart 9/1) EQ 655 (FICO - 9/17)
Goal - 700 Club in '13!!!

My Wallet - Cap 1 - $300. Cap 1 - $750. Orchard - $950.
New as of 8/29 - Target - $3000. Barclay's - $2000. Merrick - $1000. Walmart $600. And as of 9/22 - JCP $200.
Moderator
Revelate
Posts: 9,485
Registered: ‎12-30-2011
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Re: Overpay...

[ Edited ]

No lender does (or should, though admittedly some don't seem to understand the business they're in) have an issue with this: when you overpay you put more money into their account faster.  This can be lent out or otherwise count towards their reserve allowing different other money to be lent out... and either way they earn additional fractional interest than if you had paid a few days later.

 

When you add that up in aggregate, it's probably a 7 or maybe 8 figure swing for a large bank.  Not enough to make much of a difference on their balance sheet, but still a non-trivial amount.

 

I've done that on my card that shows a balance (BOFA) and I've never had a problem with it, though recently I just pay way ahead to zero and let natural charges float me into the 2-9% range and kick a day later payment if I get an unexpected charge.  I only have the one rewards card currently anyway so it gets 98% of my regular spending anyway which makes it easy; when I have a more complicated setup, I'll absolutely do as you're doing and just pay more than is required if I need to put lipstick on my pig the following month.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
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Contributor
mmmmmm
Posts: 156
Registered: ‎06-01-2012
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Re: Overpay...

[ Edited ]

Revelate wrote:

No lender does (or should, though admittedly some don't seem to understand the business they're in) have an issue with this: when you overpay you put more money into their account faster.  This can be lent out or otherwise count towards their reserve allowing different other money to be lent out... and either way they earn additional fractional interest than if you had paid a few days later.

 

When you add that up in aggregate, it's probably a 7 or maybe 8 figure swing for a large bank.  Not enough to make much of a difference on their balance sheet, but still a non-trivial amount.

 

I've done that on my card that shows a balance (BOFA) and I've never had a problem with it, though recently I just pay way ahead to zero and let natural charges float me into the 2-9% range and kick a day later payment if I get an unexpected charge.  I only have the one rewards card currently anyway so it gets 98% of my regular spending anyway which makes it easy; when I have a more complicated setup, I'll absolutely do as you're doing and just pay more than is required if I need to put lipstick on my pig the following month.

 


I think you're somewhat merging banking regulations with credit card companies.  While we have a fractional reserve banking system, credit card companies do not have a required reserve ratio.  They don't need to have a certain amount of money before they're able to say increase someone's credit limit elsewhere; the two are independent of each other.

Moderator
Revelate
Posts: 9,485
Registered: ‎12-30-2011
0

Re: Overpay...


mmmmmm wrote:

Revelate wrote:

No lender does (or should, though admittedly some don't seem to understand the business they're in) have an issue with this: when you overpay you put more money into their account faster.  This can be lent out or otherwise count towards their reserve allowing different other money to be lent out... and either way they earn additional fractional interest than if you had paid a few days later.

 

When you add that up in aggregate, it's probably a 7 or maybe 8 figure swing for a large bank.  Not enough to make much of a difference on their balance sheet, but still a non-trivial amount.

 

I've done that on my card that shows a balance (BOFA) and I've never had a problem with it, though recently I just pay way ahead to zero and let natural charges float me into the 2-9% range and kick a day later payment if I get an unexpected charge.  I only have the one rewards card currently anyway so it gets 98% of my regular spending anyway which makes it easy; when I have a more complicated setup, I'll absolutely do as you're doing and just pay more than is required if I need to put lipstick on my pig the following month.

 


I think you're somewhat merging banking regulations with credit card companies.  While we have a fractional reserve banking system, credit card companies do not have a required reserve ratio.  They don't need to have a certain amount of money before they're able to say increase someone's credit limit elsewhere; the two are independent of each other.


You're correct; however, I would point out the large majority of credit card issuers or underwriters have depository accounts as well as making other loan types.

 

I agree not all have this, but even in a blended multi-business line organization (Chase, BOFA, et al) it counts.  Even if you discount the ones that don't (Capital One to my knowledge) we can't overlook the fact that they can invest that in other ways to make money.  End of the day, money in their accounts is always better than in someone else's account, very much like our own situation as customers though on a much larger scale.

 

My apologies for not being clearer earlier, it is pretty muddled now that I read it again.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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New Contributor
CreviceTool
Posts: 51
Registered: ‎08-14-2012
0

Re: Overpay...


7PM789 wrote:
I've been doing this since I got my first tradeline and I'm beginning to wonder if this behavior has a positive or negative effect on my credit score...

It can have a positive effect on your credit score, as it will typically lower your utilization.  But there is no long term benefit, because utilization has no memory.  If you did this for a year, then compared that to only paying the balance on the due date for 11 months, then on the twelfth month you paid the balance + outstanding charges, your credit score after that twelfth month would be the same in either case, because you didn't get any "bonus points" for your utilization behavior during the previous 11 months.

 

So in other words, if you don't have a need to boost your score, there is no benefit to paying more than the current statement balance, as you could always just wait until you have a need for a boost to your score and accomplish the same thing.  If your money would otherwise be sitting in an interest bearing account, it can be more beneficial to take advantage of your available "free" credit lines.

Valued Contributor
navigatethis12
Posts: 1,940
Registered: ‎01-24-2012
0

Re: Overpay...


7PM789 wrote:
I pay my Amex and Discover by check because from what I've read my charge card isn't factored in to my utilization and with my current limit on the Discover card (designated gas card until I qualify for the penfed card) I can reach the $1,500.00 cap without exceeding 20% each of the 3 months gas is the rotating category and I pay my mastercard at my credit union. This allows me to make a little extra interest (not much but it all adds up) on the money that would otherwise be tied up making multiple payments throughout the month. When I started out with a $500.00 secured card I would make multiple payments each month but now that I have ten times the "hard limit" I started with I just manage my utilization never allowing any card to exceed 30%

Most credit card companies, these included, allow you to schedule a payment for the due date. So if the due date is the 30th and you schedule it now for the 30th, the money will stay in the bank account until the 30th and post that same day for being paid. Personally, I am worried that a cheque could get lost in the mail. My mom sends cheques all the time and a few times they have been cashed by someone at the card company.

 

Also, do not overpay by too much. A few dollars is alright but if you try to do $1000 very frequently they will probably shut it down. Banks are overly paranoid about money laundering/fraud and overpaying could be either of those.


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