topic Re: Overpay... in Credit Cards

Overpay...

7PM789 — Thu, 06 Sep 2012 02:44:48 GMT

Does anybody else besides myself send checks that are more than the balance on the statement? PIF + any charges you have already made and didn't post before the closing date or are anticipating to make before the check gets to the payment center for processing. For example, I'm mailing the check today and I know I'm putting say $50.00 gas in my truck before they'll receive the check so write it out for PIF + $50.00

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 seems like a logical approach to me but I would like to hear others opinions/experiences.

Re: Overpay...

creditnocash — Thu, 06 Sep 2012 02:52:00 GMT

i dont believe its negative.

ive done that with my citizens bank mc and it just lets you refund the money in a check. or use it towards next purchase. like today for example i paid off chase freedom card but then since its 5% at restraunts when i went to panera i put it on there. due date is the 7th even though 0 is due i pif so yeah.

dont worry about it if you plan on charging it wont show a negative balance.

Re: Overpay...

Jlu — Thu, 06 Sep 2012 03:03:15 GMT

I also do this on a regular basis but one time with my first premier card it caused the account to be closed.

Re: Overpay...

Anonymous — Thu, 06 Sep 2012 03:34:04 GMT

Why wouldn't you just pay online?

Re: Overpay...

jamesdwi — Thu, 06 Sep 2012 03:34:10 GMT

@Jlu wrote:
I also do this on a regular basis but one time with my first premier card it caused the account to be closed.

are you saying that them closing the account was a bad thing? They probably had a problem with you limiting fees and interest rate on the card.

Re: Overpay...

andre181 — Thu, 06 Sep 2012 03:40:20 GMT

I always do this and overpay current balance + pending charges + charges I know I'll make in the next few days and know the amount.

But really, who writes checks anymore? I write 1 check a month for rent and that's it.

I would go through a book of checks a month if I paid my CC's with checks as often as I pay online, not to mention a ton in postage.

Re: Overpay...

webhopper — Thu, 06 Sep 2012 03:50:25 GMT

I use push payment to overpay. No issues so far

Re: Overpay...

Anonymous — Thu, 06 Sep 2012 04:02:32 GMT

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?

Re: Overpay...

Jlu — Thu, 06 Sep 2012 04:06:45 GMT

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

Re: Overpay...

jamesdwi — Thu, 06 Sep 2012 04:19:29 GMT

Why not just pay the $200 in cash at walmart put the rest on your card, or put 200 on another rewards card and pay it off before its due. You can use multiple playment methods at walmart without any problems.

Re: Overpay...

andre181 — Thu, 06 Sep 2012 04:09:58 GMT

@Anonymous 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.

Re: Overpay...

7PM789 — Thu, 06 Sep 2012 04:10:32 GMT

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%

Re: Overpay...

andre181 — Thu, 06 Sep 2012 04:12:41 GMT

@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.

Re: Overpay...

7PM789 — Thu, 06 Sep 2012 04:39:19 GMT

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.

Re: Overpay...

Anonymous — Thu, 06 Sep 2012 04:33:06 GMT

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.

Re: Overpay...

Revelate — Thu, 06 Sep 2012 04:49:49 GMT

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.

Re: Overpay...

Anonymous — Thu, 06 Sep 2012 05:24:27 GMT

@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.

Re: Overpay...

Revelate — Thu, 06 Sep 2012 06:06:27 GMT

@Anonymous 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.

Re: Overpay...

Anonymous — Thu, 06 Sep 2012 11:57:09 GMT

@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.

Re: Overpay...

navigatethis12 — Thu, 06 Sep 2012 12:37:59 GMT

@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.