topic Re: Holiday Balances in Credit Cards

Holiday Balances

Red1Blue — Fri, 09 Jan 2009 06:12:56 GMT

Now that the Christmas shopping is done and balances start posting to accounts, how is it going to effect the moods of the creditors and credit card companies? I normally do PIF but still some balances might post on to my CR's. Does CCC's start taking adverse actions due to the holiday balances?

Re: Holiday Balances

marty56 — Fri, 09 Jan 2009 11:43:15 GMT

Suzie Orman was talking about that the other day and stated they CCCs are starting at the bottom in terms of CLDs and interest rates hikes.

She stated they you would be a prime candiate for one if you had a history of just paying the minimum and CCCs know people where using their cards so IMHO I would think they would look for heavy holiday use and slash CL's.

Re: Holiday Balances

Anonymous — Fri, 09 Jan 2009 14:57:25 GMT

I think that as long as the recent holiday use doesn't raise your overall utilization to a point that would make creditors nervous, you're fine.

Re: Holiday Balances

haulingthescoreup — Fri, 09 Jan 2009 23:32:49 GMT

They do still like to have their income from transaction fees, I'm sure, but banks are so strapped for cash now that they greatly prefer PIF'ers, so that they don't have as much loaned money floating around out there.

For anyone who got a little happy with their cards over the holidays, I hope that you can pay way over the minimum on your January statement, and finish PIF'ing it in February.

Remember, right now banks are all about getting cash back onto their books. They're going to prefer customers who can help them in this goal by PIF'ing.

Re: Holiday Balances

Anonymous — Sat, 10 Jan 2009 00:03:34 GMT

@haulingthescoreup wrote:
They do still like to have their income from transaction fees, I'm sure, but banks are so strapped for cash now that they greatly prefer PIF'ers, so that they don't have as much loaned money floating around out there.

For anyone who got a little happy with their cards over the holidays, I hope that you can pay way over the minimum on your January statement, and finish PIF'ing it in February.

Remember, right now banks are all about getting cash back onto their books. They're going to prefer customers who can help them in this goal by PIF'ing.

How do you think a CCC would see us? We usually carry a fairish smallish balance (roughly 20%) and make huge payments (WAY more than minimum ... like 10-15x the minimum). Will they see us, because we carry a balance, as bad risks?

Even though we pay WAY more than the minimum balance? F'example, on DH's Cap One, on a $1K limit, we usually carry roughly around 20-30%. But since the holiday season is over, we've paid it down to $40. Will they be "happy" with us?

With WaMu, we've got a $2500 limit and have paid it down to slightly less than $600 (that's been our normal pattern). We WILL be making another largish payment after we close on our home on the 20th. Will WaMu see us as a bad risk?

The only reason we've been so lax with WaMu's balance is just because we're 0% interest until 2010.

Re: Holiday Balances

haulingthescoreup — Sat, 10 Jan 2009 00:18:39 GMT

This is a very legitimate question in this day and age!!!

You know, I think it depends a lot on each bank's cash reserves and degree of uneasiness. If they have enough capital to work with (courtesy of the bailout and all!), then they might well be fine with tidy balances being carried, and being able to get some interest luv out of consumers.

if their backs are against the wall, with their pants pockets turned inside out after looking for spare change, they might rather have the PIF than the interest + promise to pay back one day.

I am the ultimate credit chicken, so right now, the only revolving account I have with a balance is my HELOC. And if USAA wants to acquire another house to add to its inventory, then so be it.

Re: Holiday Balances

jaxstraw — Sat, 10 Jan 2009 02:27:05 GMT

Most of my 16-17 % utilization when Chase just cancelled my acounts was from over the holidays.

Not only do I always do holiday shopping but I book and pay for our Valentines trip. To add insult to injury I used my Freedom card because they were giving out extra bonus points for any travel,cocert,or entertainment purchases until March.

I explained that to them while trying to re-instate the accounts. One of the reasons given for closing the accounts was heavy recent use.

I tried explaining that I was using them more because of the holidays and was going to pay off the balances over the next month, they could look at my CR and see that I don't carry much balance ever and past history shows I PIF or pay down quickly.

They didn't care one bit.

So the answer in my case is a huge 'YES' - they do care and notice holiday balances and take adverse action.

Re: Holiday Balances

Anonymous — Sat, 10 Jan 2009 05:17:08 GMT

@haulingthescoreup wrote:
They do still like to have their income from transaction fees, I'm sure, but banks are so strapped for cash now that they greatly prefer PIF'ers, so that they don't have as much loaned money floating around out there.

For anyone who got a little happy with their cards over the holidays, I hope that you can pay way over the minimum on your January statement, and finish PIF'ing it in February.

Remember, right now banks are all about getting cash back onto their books. They're going to prefer customers who can help them in this goal by PIF'ing.

I'm counting on it.

Re: Holiday Balances

marty56 — Sat, 10 Jan 2009 12:16:51 GMT

I wonder if the CCCs that are inclined to do CLDs are more interested in when you revolve another CCC's balance? If so this might be another reason for letting only 1 CC report a balance.

So far I have been immune to CLDs. I dont know if its becuase I am doing everything right or its just not my turn.

LOL Lord knows in the not too distant past I was a prime candidate for it!

Re: Holiday Balances

Anonymous — Sat, 10 Jan 2009 17:02:45 GMT

I've avoided CLDs too, and have had a couple of recent interest rate drops. I did (briefly) get my total CC balance to $0, which probably looked good, but only if anyone was around for the day or so that was the case to notice it!

It's been suggested to me that some of this is less a matter of utilization than it is of patterns. I routinely put $3500 or so per month on cards (spread across 2 AMEX cards, BofA Visa, Discover MORE, and both Target & Nordstrom Visas). I PIF nearly all of it, but leave enough "floating" so they're earning some interest - but not nearly enough so they worry that I can't cover it. For example, I had a $127 balance on Target - I paid $100 within a week, then $27 after receiving the statement.

The past few weeks I've been purchasing a mountain of books for a relative's grad school needs - well into the $3K range there alone, and we're probably only halfway through the order. It's an odd enough pattern that will double my CC usage for the month, and I'll PIF that from some "liquid savings" in my CU savings account. Thought about just using my debit card, but frankly wanted the CC protection (many of the bookstores are small and overseas), and also wanted to show that I could use the cards at what will easily be 2-3x "normal" - and still stay out of trouble.

Right now, I don't know that I'd do much abnormal use on my CCs unless I could quickly demonstrate that I could pay it off. When I ran up ~10K last summer traveling, my score dropped >80 points in two months (at least TU FAKO, which is all I watched). I took 3 months to pay that off, which was probably a mistake, but it was a once-in-a-lifetime opportunity for me & my kid.

I'm interested to see how people's holiday purchases affect #s and CC behavior now, especially if they're not PIF'd with the statement. My guess is that there'll be rapid CLDs, but we'll see.

Re: Holiday Balances

Anonymous — Sun, 11 Jan 2009 01:50:16 GMT

Marty and Upper, I'm with both of you on this and so far I'm OK too. I charge a couple grand a month and pay in full. So far so good.

Re: Holiday Balances

Anonymous — Tue, 27 Nov 2012 01:57:15 GMT

The thing to watch for is your percentage of credit used of any particular card. Even though you PIF, you still don't want to use 90% of your credit on any card.

Secondly, the above applies even if you pay everthing that you charged THIS month. So if your statement says that you owe $100 and you charge $900 more on a $1000 credit limit, your CR will say that you charged $1000 even though you pay in full every month.

Re: Holiday Balances

algorithmslave — Tue, 27 Nov 2012 02:42:57 GMT

@Anonymous wrote:
The thing to watch for is your percentage of credit used of any particular card. Even though you PIF, you still don't want to use 90% of your credit on any card.

Secondly, the above applies even if you pay everthing that you charged THIS month. So if your statement says that you owe $100 and you charge $900 more on a $1000 credit limit, your CR will say that you charged $1000 even though you pay in full every month.

Best advice I have seen....right now, the rules for calculating the scores keeps this in mind..... If you decide to carry a balance, I would carry no more than 7 percent of a balance to debt/ratio if you have had the card PIF before hand and reported that way. Let me make this clear, unless there is a "big fat conspiracy", this is not a bank rule rather a FICO rule. They make the rules, not me.

On another note, I have often wondered if part of the negative perception of carring a balance on the part of FICO has to do with not using the card with a balance being carried. For example, if someone charges something 100 dollars on a 300 dollar debt ceiling for the holidays but does not pay off the complete balance and stops charging on the card, I wonder if this is the negative perception? I hope I explained that well....

Re: Holiday Balances

Anonymous — Tue, 27 Nov 2012 13:12:50 GMT

Great cautions to have.

Re: Holiday Balances

EaglesFan2006 — Tue, 27 Nov 2012 14:53:46 GMT

@Anonymous wrote:
The thing to watch for is your percentage of credit used of any particular card. Even though you PIF, you still don't want to use 90% of your credit on any card.

Secondly, the above applies even if you pay everthing that you charged THIS month. So if your statement says that you owe $100 and you charge $900 more on a $1000 credit limit, your CR will say that you charged $1000 even though you pay in full every month.

How accurate is this? I mean at times I've used my card more than 90%, but I pay multiple times a month...and the CC only reports once a month, usually on the statement date, so isn't it based on the balance that you have at that time?

In any case, i'm pretty nervous about this whole thing after reading these posts, even though the bulk of them were written during the worst of the financial crisis. I use my cards regularly, but make large payments each month (though not PIF). I guess all I can do is hope for the best.

Re: Holiday Balances

Jutz — Tue, 27 Nov 2012 14:58:56 GMT

I think reporting 90% is a lot different than using 90%.

Re: Holiday Balances

EaglesFan2006 — Tue, 27 Nov 2012 15:32:08 GMT

@Jutz wrote:
I think reporting 90% is a lot different than using 90%.

I agree, so I'm wondering what guidelines the CCs use. Frankly, I can't see why they'd cut your limit if you use the card regularly and make sizeable payments.

Re: Holiday Balances

Razeus — Tue, 27 Nov 2012 22:54:09 GMT

Wow, this thread was from 2009. I was going to say, I haven't heard of lines getting cut in years....