topic Re: What would be considered high risk spending patterns? in Credit Cards

What would be considered high risk spending patterns?

SRT4kid93 — Sun, 15 Sep 2024 21:59:01 GMT

I have seen the term "high risk spending patterns" used on the forum, but I haven't been able to find much on what this actually means.

what is considering high risk spending? I assume someone that lists a 30k salary and then goes out and maxes out their card all the time would fall into this category. But then again, if their bill is being paid off, what does it matter?

maybe their husband or their dad pays their bill, and the more they use the card the more money the card issuer makes.

Re: What would be considered high risk spending patterns?

Windchill92 — Sun, 15 Sep 2024 22:25:20 GMT

Well, the issuer doesn't know that the user has a relative paying the bill, only that they get paid.

What likely concerns them is the uncertainty of them suddenly not being able to pay a maxed out card. This is the same type of uncertainty as someone who has been applying with velocity or someone who has added 7+ revolving accounts in the last 6 months.

The creditor's lack of knowledge about what or why regarding a customer's behavior yields the thought "something is up with xyz customer", and thus existing credit may be reduced or future credit may not be extended to them.

TLDR: Largely a matter of uncertainty to the creditor, but I yield to other FF members to give better examples.

Re: What would be considered high risk spending patterns?

Anonymous — Sun, 15 Sep 2024 22:36:10 GMT

@SRT4kid93 wrote:
I have seen the term "high risk spending patterns" used on the forum, but I haven't been able to find much on what this actually means.

what is considering high risk spending? I assume someone that lists a 30k salary and then goes out and maxes out their card all the time would fall into this category. But then again, if their bill is being paid off, what does it matter?

maybe their husband or their dad pays their bill, and the more they use the card the more money the card issuer makes.

In general, if someone consistency is spending more than they make on a credit card, and PIF, there are two usual explanations:

1) Employer refunded travel The person is charging airfare/gas/lodging/meals to the card and the employer is refunding the charges. Here the type of charges are key

2) Manufactured Spend. Here the charges are more likely to be large ones at grocery stores (and maybe drug stores and gas stations), at places this particular card has a high multiplier.

Issuers certainly don't like 2), not so much for the risk of default (which can be very small) but because of cost. They are paying rewards in excess of their share of the swipe fee, and there is almost no limit to what can be charged. High risk for the issuer.

1) is less of a risk, unless the employee doesn't get reimbursed at some point (fights with the boss and leaves with things unresolved)

And as for husband or father paying, hey, it's the 21st century, could even be a female paying!

Re: What would be considered high risk spending patterns?

SRT4kid93 — Sun, 15 Sep 2024 22:47:48 GMT

#1 happens to me all the time.

i work at a facility where the clients are not trusted with money, we give them a special debt card with lots of restrictions.

but in any case, me and other employees will pay for stuff for the client all the time and get reimbursed. Could be for tons of reasons, their spending account is empty and they need something, so we pay and then wait for the parents to pay us back. There's also times when a client is kicked out or sent to a different facility and they need to be escorted there for different reasons, and so we drive them there (or sometimes accompany them on a flight), and need to be reimbursed for gas, food, travel, etc. sometimes it takes a couple days and need to pay for hotels. It can really add up.

when we do this, legally we are "contracting ourselves out to the clients parents" and therefore are paid as independent contractors.

Re: What would be considered high risk spending patterns?

Anonymous — Sun, 15 Sep 2024 22:55:19 GMT

@Anonymous wrote:
hey, it's the 21st century, could even be a female paying!

Have any prospects for me in your little black book?

Re: What would be considered high risk spending patterns?

NoMoreE46 — Mon, 16 Sep 2024 01:22:20 GMT

Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

Re: What would be considered high risk spending patterns?

CreditCuriosity — Mon, 16 Sep 2024 01:45:37 GMT

@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM

Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

Re: What would be considered high risk spending patterns?

Zeiram — Mon, 16 Sep 2024 05:58:57 GMT

@CreditCuriosity wrote:
@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM
Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

I'm hoping that going to a Hilton hotel on my Hilton AmEx doesn't get me FR'd for cycling. They gave me such a small limit that I'll probably spend over the limit for the card that cycle without going over by paying off some of the other bills.

My other cards have huge limits but I think I pissed off AmEx by bypassing a pop-up jail and they decided to get revenge with a $1,000 limit on that card. I'm working my way towards a SUB with things like light bills and some New Card Offers at Walmart and gas station.

Re: What would be considered high risk spending patterns?

NoMoreE46 — Tue, 17 Sep 2024 15:58:55 GMT

@CreditCuriosity wrote:
@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM
Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

I was thinking of buying buillions/metals (would be considered as MS) and be coded as a cash advance.

This is from AMEX:

Effective January 15, 2021, we are updating this sub-section to add precious metal coins and bullion to the definition of Cash Advance in your Cardmember Agreement.

Re: What would be considered high risk spending patterns?

CreditCuriosity — Tue, 17 Sep 2024 15:55:27 GMT

@NoMoreE46 wrote:

@CreditCuriosity wrote:
@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM
Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

I was thinking of buying buillions/metals with respect to MS would be considered as a cash advance.

This is from AMEX:
Effective January 15, 2021, we are updating this sub-section to add precious metal coins and bullion to the definition of Cash Advance in your Cardmember Agreement.

guess depends on lender and how it codes if l3 data etc.

Re: What would be considered high risk spending patterns?

NoMoreE46 — Tue, 17 Sep 2024 16:51:44 GMT

@CreditCuriosity wrote:
@NoMoreE46 wrote:

@CreditCuriosity wrote:
@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM
Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

I was thinking of buying buillions/metals with respect to MS would be considered as a cash advance.

This is from AMEX:
Effective January 15, 2021, we are updating this sub-section to add precious metal coins and bullion to the definition of Cash Advance in your Cardmember Agreement.
guess depends on lender and how it codes if l3 data etc.

Now you getting a little too deep.

Re: What would be considered high risk spending patterns?

UncleB — Wed, 18 Sep 2024 08:45:36 GMT

@CreditCuriosity wrote:
@NoMoreE46 wrote:

@CreditCuriosity wrote:
@NoMoreE46 wrote:
Trying to buy crypto or precious metals are usually considered high risk tranactions by issuers.

jM
Precious metals that is kinda silly imho as long as from a reputable place whether JM Bullion or Costco etc. As long as you don't buy near your CL you should be fine as known many people that haven't had an issue with it. Crypto unsure about. Might not be the smartest thing to due due to fees althoug with costco you can buy with black card 2% and in theory AR 4.5% = 6.5% off. Seems like a winner if can get it their if you are into collecting precious metals.

I was thinking of buying buillions/metals with respect to MS would be considered as a cash advance.

This is from AMEX:
Effective January 15, 2021, we are updating this sub-section to add precious metal coins and bullion to the definition of Cash Advance in your Cardmember Agreement.
guess depends on lender and how it codes if l3 data etc.

I can provide some data points on this... over the years I've purchased PMs from JM Bullion/Provident (and a few others) and never had a problem.

I usually used either Discover or one of my Freedom cards during the respective Paypal quarters, where the 5% either canceled out the CC fee or there was a small gain. In all my purchaes the amounts were very modest (always under $500) so nothing crazy that would be likely to trigger an algorithm. Keeping in mind the quarterly limit of $1500 on Disco/Freedom it would be silly to use either for a large PM purchase so most folks would likely be fine.

I came across some chatter on the interwebs that Amex may have reversed their policy of treating PM purchases as cash advances, although I'm not sure why anybody would want to use an Amex for that anyway since there are nearly always better options (sign-up bonus spending aside, but I'm not sure I'd use it for that, either).

Only speaking for myself, I'm comfortable making a modest (to me) purchase of PMs with a credit card. I don't have a Costco membership, but if I did and I was in the market for a gold bar I'd be comfortable using my U.S. Bank AR since I've made oddball purchases in that amount before and they didn't flinch (a $2500 purchase isn't 'normal' for me, but I have done it a few times before so it's not unheard of, either). IMO it's all about what's consistent with one's historical and usual spending patterns (and resources, of course).

Just my 2¢.