topic Re: Why do people insist on doing this? in Credit Cards

Why do people insist on doing this?

Ardecko — Wed, 18 Mar 2020 01:12:23 GMT

I made this thread so that I wouldn't pollute the other post, here: https://ficoforums.myfico.com/t5/Credit-Cards/Limited-of-Payments-in-a-Cycle/m-p/5954412

As the above thread attempts to document, and has been seen in many threads over the past few years at least, there are problems, bumps, and limitations to paying some (or many?) credit cards via pull from the CC provider.

Most banks and CUs offer free Bill pay, and most CC lenders can accept these payments electronically, making them pretty reliable and quick enough.

I just don't understand. Why do people insist on trying to do this?

Re: Why do people insist on doing this?

Anonymous — Wed, 18 Mar 2020 01:17:31 GMT

Some people like to pay their charges as they make them. I don't personally like the idea but not everyone cares about float and would rather not have a balance.

Re: Why do people insist on doing this?

Kforce — Wed, 18 Mar 2020 01:25:03 GMT

@Ardecko wrote:
I made this thread so that I wouldn't pollute the other post, here: https://ficoforums.myfico.com/t5/Credit-Cards/Limited-of-Payments-in-a-Cycle/m-p/5954412

As the above thread attempts to document, and has been seen in many threads over the past few years at least, there are problems, bumps, and limitations to paying some (or many?) credit cards via pull from the CC provider.

Most banks and CUs offer free Bill pay, and most CC lenders can accept these payments electronically, making them pretty reliable and quick enough.

I just don't understand. Why do people insist on trying to do this?

+100, Bill-Pay would cure that thread

Re: Why do people insist on doing this?

Gmood1 — Wed, 18 Mar 2020 01:26:04 GMT

@Anonymous wrote:
Some people like to pay their charges as they make them. I don't personally like the idea but not everyone cares about float and would rather not have a balance.

I hear ya, makes using a credit card pretty moot.. me thinks.😂

Easier to use a debit card and be done with it IMHO.

Unless bumping against the 30% usage ceiling. Paying multiple times a month actually spooks some lenders. 👻

Re: Why do people insist on doing this?

vic6string — Wed, 18 Mar 2020 01:40:50 GMT

I have 5 cards right now with about 30k limit between them. That was not the case however just a year ago. I am just over 5 years removed from a BK, and at one point I had ONE card with a 1k limit. You know how easy it is to fill up a 1k limit when you are trying to put all of your spend on that card? I had months with 4k spend on that 1k card. Doing that and paying it all off before posting got me some cash back, but more importantly it got me credit limit increases, which led to more cards, which led to better cards which led to higher credit scores.

I don't have to worry about keeping utilization low now, but I still pay each card probably about twice per month because I have gotten used to keeping the numbers low, and as someone who has gone through BK, I know how easy it is to sudddenly fall into a hole you can't get out of. If an emergency happens (like right now with the disease we cannot mention), and I end up having to throw more than usual on my cards, at least I know that they were close to empty anyway to start. Also, paying a bit to each card more than once means there is much less chance of you missing a payment on any of them because you'd have to miss more than one for it to count.

Re: Why do people insist on doing this?

Anonymous — Wed, 18 Mar 2020 02:05:38 GMT

@Gmood1 wrote:
@Anonymous wrote:
Some people like to pay their charges as they make them. I don't personally like the idea but not everyone cares about float and would rather not have a balance.
I hear ya, makes using a credit card pretty moot.. me thinks.😂
Easier to use a debit card and be done with it IMHO.

Unless bumping against the 30% usage ceiling. Paying multiple times a month actually spooks some lenders. 👻

I mean when I was starting out I had to pay multiple times a month but those were like charge 200 out of 300 limit and then pay. I didn't go buy a pack of cigarettes and a handle of vodka and then go home and pay that tiny charge right away.

It definitely does look like you are afraid of getting trapped in debt you can't PIF when people pay like that and that's a sign of someone who can't budget and a total red flag. I would be shocked if lenders don't see it that way.

Re: Why do people insist on doing this?

Anonymous — Wed, 18 Mar 2020 02:22:03 GMT

I usually put most of my spend on cc during the weekend shopping.

Then on Tues or Weds every week I go through the cards i used and pay the balance.

If I read this corrctly, then I am spooking creditors because I pay-off the balance every week?

Re: Why do people insist on doing this?

Taurus22 — Wed, 18 Mar 2020 03:08:30 GMT

There is a very good reason for some people to do this....

Myself, regardless of how much spend I put on a card, (or across all my cards for that matter) in order to make sure my UT% is 10% or less, I almost always pay down my cards by the 20-22nd of every month to make sure I am below that threshold. From my findings, most cards report balances between the 24-31st of the month to the bureaus. This is also why I have all of my card statements set to fall between 1-5th at the start of the month.

So essentially I am making a mid-cycle payment by the 22nd, (latest) to make sure it has a couple days to post and then making my 2nd payment after my statement posts, for each card usually. My scores are high, my UT% stays low, I have no issues getting CLI's and haven't had any CLD's or closures. Card issuers want to see spend through their cards which is why they really don't mind multiple payments, and having some balance to report shows usage to the bureaus. Also, as most of my cards are rewards cards, I try to maximize as much as I can....but I still don't want to go beyond 10% UT, hence the mid-cycle payment.

But I can certainly see why it would be a red flag to have someone put small amounts on a card and immediately pay them off, repeatedly. As others have mentioned, it would seem to create a veil of risk.... The cardholder is restraining their own balances because they can't afford to carry a balance and pay larger sums. At least that's what the issuers would assume....

Re: Why do people insist on doing this?

Pit-Smoker — Wed, 18 Mar 2020 03:11:52 GMT

I'm certianly not paying OFF the creditors every week, but I definitely try to make multiple payments. I just did this a bunch of times with Disco last month. 5% category is groceries... I buy groceries multiple times weekly... it would NORMALLY go on my debit... so I pay for it on Disco and immediately pay it off.

As I noted in your linked thread, Disco warned me that anything I paid may not show in the AVAILABLE BALANCE for 3 days... but that's not to say that it wouldn't be credited. I did so and made about 4 payments in the last 7 days of the cycle. Although I had to call Customer Service to get one through, there were no real issues and the underlying cause revolved around an internet blip, not my activities.

If your question is "why would I do it on the CC's own website instead of a push from my bank?" then, well, if I'm up against a deadline, who's the CC going to believe? The activity from its own site or some phantom bank it's got no relationship with? I don't like to push anything from my bank, and don't like the 'bill pay' concept from there altogether-- they have no incentive to get it right. Not really.

Just an opinion, I guess?

Re: Why do people insist on doing this?

Anonymous — Wed, 18 Mar 2020 03:28:10 GMT

I usually do more than 1 payment a month per card. I recently filed Chapter 7, and prior to that carried balances (90% utilization most the time) on credit cards. I promised myself after the bankruptcy that I would never do that again. So part of it is fear, while I am learning better credit habits I try to make sure I don't get in a hole too big to PIF each month (not really an issue with current CLs, but want to get into the habit now). I also like to take care of bills bi-weekly when I get paid so I am not stressed about anything (I remember when I was unable to pay all bills each month, and it is nice to know everything is taken care of). Additionally, my CLs are tiny (but I am grateful for the chance to rebuild) and often I need to pay mid-month just to put the remaining expenses on them. I was told that with Cap1, doing this helps with CLI requests.

I was unaware that putting multiple payments per month would cause red-flags to go up. This seems counter to what I have heard about Cap1, but then I know they aren't considered a premium institution. Since I am not getting back in with a premium for at least four more years, I hopefully will have developed (and trust) my credit usage in the future to only PIF once a month.

Re: Why do people insist on doing this?

Anonymous — Wed, 18 Mar 2020 03:56:16 GMT

While it is not as common, some banks do not have free bill pay. The nature of banks offering checking accounts without fees may mean that they will not/cannot offer certain services, such as free bill pay, lest these accounts be unprofitable. In this case, making payments from the credit card online portal may be the better option.

Re: Why do people insist on doing this?

CA4Closure — Wed, 18 Mar 2020 04:41:09 GMT

I pay my credit cards twice a month. Last paycheck of the month goes to mortgage. Then if there is a few thousand dollars left, I pay the biggest credit bill I have. I rotate my cards like using one card for everything then the following month I use another card. I have less than $500 in credit card debt at any given time. My utilization is < 1%.

Re: Why do people insist on doing this?

RehabbingANDBlabbing — Thu, 19 Mar 2020 05:44:36 GMT

Personally, I like to pay throughout the month as money comes in. I'm not paying individual charges, but I am strategically using my cards for the most rewards and to optimize my utilization. I have two normal paydays throughout the month, but sometimes I get money at unusual times from my business. I usually just pay twice a month using the credit card's website.

To me, paying off the balances quickly is more about my mindset for budgeting and making sure I am not carrying balances. I know to stop spending if I am getting close to racking up a balance I cannot pay off in the next two weeks. For me, eating out is one of those discretionary things that is easy to overspend on, so I like to keep track of it as much as I can. Basically, I am paying all of my cards in full each month and I am paying all of my extra income to my student loans each month. My current plan is to pay off my student loans ($38k) and my car loan ($22k) over the next 2-3 years. Carrying credit card debt is incompatible with reaching my goals.

Re: Why do people insist on doing this?

Loquat — Thu, 19 Mar 2020 12:37:21 GMT

Most are posting here from their own perspective. You can't possibly know the reason why a person does what they do. It can be various reason why stemming from lower limits causing the need to constantly cycle, fear of getting into financial trouble again if one has been down that road, to no having the ability to do bill pay from their bank or credit union.

Please stop to consider that not every option that you may have may be afford to those of another. Just as we are unique in our card strategy we are also unique in the way we handle our finances.

Be mindful that because someone doesn't operate in the same manner as you doesn't make you right and them wrong...it makes us...unique.

Re: Why do people insist on doing this?

Anonymous — Thu, 19 Mar 2020 12:56:12 GMT

I like 0 balances. A few years ago when I had little credit, I paid every week to show the CCC that I would pay. I have slowed down and pay twice a month now.

Re: Why do people insist on doing this?

UpperNwGuy — Thu, 19 Mar 2020 14:06:13 GMT

I always pay my cards using a pull from the card issuer's website. I haven't had a problem in the 20 years I've been doing it. I pay off my two most heavily used cards twice a month, and the others once a month.

Re: Why do people insist on doing this?

PullingMeSoftly — Thu, 19 Mar 2020 16:23:06 GMT

The bottom line is we should all do what works best for any of us to manage spending and use credit responsibly (thanks Capt. Obvious!)

For me, I don't see how making multiple payments a month would spook any lender, I don't buy that. That can just as easily be viewed as responsible behavior. I happen to be obsessive compulsive about my balances being zero and that hasn't stopped me from gaining CLI's, and have never had an AA as a result. I pay my balances every couple days, which also allows me to regularly monitor my accounts, and no lender has expressed reservations about me doing that. It's kinda like credit whack-a-mole...charge, paid, bam!

Re: Why do people insist on doing this?

Anonymous — Thu, 19 Mar 2020 16:34:46 GMT

@PullingMeSoftly wrote:

For me, I don't see how making multiple payments a month would spook any lender, I don't buy that. That can just as easily be viewed as responsible behavior.

While it may not in fact spook a lender, one possible reason is that it is simply not usual behavior. With most bills, people pay them after receiving them. (For a lot of bills there is no alternative, e.g. my electricty provider website doesn't give me a real-time update as to what I owe today, so I need to wait for the bill to be produced.) And people also appreciate the float offered by the cards, so paying early wastes money.

So as soon as you do something unusual, the issuer COULD pay closer attention. Yes, they may decide it's harmless and appreciate getting their money much earlier than needed, but that is how it could spook to some extent.

Re: Why do people insist on doing this?

Anonymous — Thu, 19 Mar 2020 16:37:56 GMT

It might depend on credit profile and CLs.

I think they understand that if you have a $1K limit, a balance of $800 and then you pay it off, then make a $500 charge after it clears, you have a gallon of water and a 1/2 gallon container.

I would think if you have a thin file, you might be learning how to use credit and need some kind of security blanket, because you know, you've heard people get into credit card problems and you are afraid of that happening to you until you get the hang of it.

If you have a sketchy credit profile, CCC might actually appreciate you paying every few days. If I have an iffy credit history, and you lend me $500, and I pay you back in 5 days, you might not bite your nails as much.

The only time I think issuers might get spooked is if you have a solid payment history, spotless credit profile, CLs of $20K+ on each card, and all of a sudden you start that payment behavior, especially in a time like this, they might think something is going on. And a CLD would not surprise me if it happened. Anyone willing to test that theory?

Re: Why do people insist on doing this?

PullingMeSoftly — Thu, 19 Mar 2020 17:03:48 GMT

@Anonymous wrote:

The only time I think issuers might get spooked is if you have a solid payment history, spotless credit profile, CLs of $20K+ on each card, and all of a sudden you start that payment behavior, especially in a time like this, they might think something is going on. And a CLD would not surprise me if it happened. Anyone willing to test that theory?

So aside from the "all of a sudden" caveat, and not all of my cards have $20K+ CL's, the rest of your mentioned criteria fits my profile and I have not yet had a CLD or any other AA. I continue to pay each lender about once or twice a week.