Worried about balance chasing

[Muzikdude]

DW opened a Discover card a little over a year ago, got 15 months no interest. Neither of us knew much about credit or credit scores at the time, but we manage our money well... 

After receiving the card, we began using it until we completely maxed it out (talking about 95+%), and have been only making minimum payments since then. Now that the intro 0% apr is about to expire, I was planning on just paying the whole thing off before interest starts to hit. However I have read here that some people have been balanced chased after carrying a large balance for a long period of time. 

Does anyone think we will have a problem with this? Would it be better to make several large payments over the next few months? Or is PIF a better option here? We have three months to pay it off, but she wanted to PIF now to bring utilization to 0 so she can apply for a different card. She just did the same thing with her other card, so Discover is her only card with a balance.

[bch238]

Just pay the whole balance at once.  Balance chasing occurs when a borrower maintains high balances over a significant period of time and makes small payments.  It usually occurs when the borrower has several maxed out cards indicating financial distress and future inability to pay debts.

[compassion101]

I doubt they will balance chase you as per reasons above. Also they understand the 0% is the incentive for keeping the balance.

Also, if they did want to balance chase you, paying small amounts wouldn't help you avoid it. Either way, I'd lay a bet that you are fine.

[montana586]

I say better to be safe than sorry if u have the funds to pay it off I would shows them right off the bat hey I was just taking advantage of the offer plus it may it work in your favor that u might need a CLI as your running a lot thru the card just my .02

[Muzikdude]

I will take the advice and PIF... should I ask for a CLI right after?

[B335is]

I tend to think lender's view a history of only making minimum payments for 12+ months and then a huge payment, as risky.  So I tend to make bigger monthly payments than the "minimum."  But what's done is done and since your 0% is about to expire, you can obviously do one of three things:

1)  Pay in full

2)  Make a few larger payments over three months

3)  Spread out larger payments and wind up paying interest

Discover is one of those lenders that seems to like balances, so if I was seeking a CLI from them I would probably make a larger payment (say $500 on $4k balance), request the increase, then pay in full.

[score_building]

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@B335is wrote:

I tend to think lender's view a history of only making minimum payments for 12+ months and then a huge payment, as risky.  So I tend to make bigger monthly payments than the "minimum."  But what's done is done and since your 0% is about to expire, you can obviously do one of three things:

1)  Pay in full

2)  Make a few larger payments over three months

3)  Spread out larger payments and wind up paying interest

Discover is one of those lenders that seems to like balances, so if I was seeking a CLI from them I would probably make a larger payment (say $500 on $4k balance), request the increase, then pay in full.

They've seen plenty of balances carried in OPs payment history already, since the card has been maxed with min pay.

OP- would strongly urge to PIF. Inexpensive debt (if any debt) is a higher priority than trying to second guess a tried and true path to CLI in the form of PIF.

Chalk it up to experience to routinely pay more than min, even on BT...ideally at least 10% of outstanding balance will typically earn an above avg repayment score with a lender. Even just double the min or +25, some indication to the lender one is not living by the seat of their pants can shift the metric in the card holder's favor to appear less risky.

[Muzikdude]

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@score_building wrote:

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@B335is wrote:

I tend to think lender's view a history of only making minimum payments for 12+ months and then a huge payment, as risky.  So I tend to make bigger monthly payments than the "minimum."  But what's done is done and since your 0% is about to expire, you can obviously do one of three things:

1)  Pay in full

2)  Make a few larger payments over three months

3)  Spread out larger payments and wind up paying interest

Discover is one of those lenders that seems to like balances, so if I was seeking a CLI from them I would probably make a larger payment (say $500 on $4k balance), request the increase, then pay in full.

They've seen plenty of balances carried in OPs payment history already, since the card has been maxed with min pay.

OP- would strongly urge to PIF. Inexpensive debt (if any debt) is a higher priority than trying to second guess a tried and true path to CLI in the form of PIF.

Chalk it up to experience to routinely pay more than min, even on BT...ideally at least 10% of outstanding balance will typically earn an above avg repayment score with a lender. Even just double the min or +25, some indication to the lender one is not living by the seat of their pants can shift the metric in the card holder's favor to appear less risky.

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Thanks all for the replies

That makes sense, the idea of paying above minimum... which leads me to another question.  What if I had been paying more than the minimum and then subsequently charging back up to previous balance?

For example, I open a new credit card with 0% interest period and charge it up to a high balance, lets say $10K. During each month I make payments of $3K, but also make purchases for another 3K, therefore keeping my balance at about the same level, while making somewhat substantial payments at the same time.

Would  this be viewed more favorably (i.e. "repayment score")than just making minimum payments and not charging anything?

Of course, all of this is assuming I am on 0% interest, otherwise I wouldn't bother. The idea is to have the money free to be used elsewhere for the duration of the 0% interest period.

[youngandcreditwrthy]

If you come into a large amount of money, I say it's better to spread moderately large payments through a few weeks or months as to not set off any computer alarms LOL...

like in the 500-1000 range. I've made 2-6K payments to Amex, Barclay's and Chase all after utilizing zero percent offers with nothing bad happening. But I think you should still be careful. A lot of lenders do this kind of stuff to limit "risk" as they perceive, and rightfully so I suppose.

Best of luck.