topic Re: AMEX: How much above minimum payment to avoid trouble? in Credit Cards

AMEX: How much above minimum payment to avoid trouble?

Trivolve — Mon, 17 Mar 2014 02:57:05 GMT

I've heard of people who had CLD or FR when they've been paying minimum payment, so I'm wondering if there's a general guideline to how much more than minimum payment (200%? 300%?) I should pay in order to avoid trouble. I have $4000 balance on my $12,000 BCE, but it has a promo 0% APR till the Dec'2014 so I want to maximize that zero interest.

Thanks in advance!

Re: AMEX: How much above minimum payment to avoid trouble?

Rhaeny — Mon, 17 Mar 2014 02:54:57 GMT

@Trivolve wrote:
I've heard of people who had CLD or FR when they've been paying minimum payment, so I'm wondering if there's a general guideline to how much more than minimum payment (200%? 300%?) I should pay in order to avoid trouble. I have $4000 balance on my $12,000 BCE, but it has a promo 0% APR till the Dec'2015 so I want to maximize that zero interest.

Thanks in advance!

Typically on any card that I have a balance on I pay at least 3 times the minimum.

And as for any 0% offers, I just divide the balance up by the number of months I have on the promo and pay that. Now that promo ends 21 months from now. Even though you have quite a bit of time left to pay it off, I'm not sure that I would stretch it out that long. I probably wouldn't do more than 12 months, of course depending on what you can afford to do.

I have heard that they don't like to see balances carried for long periods of time, however if that's the promo they gave you then it is hard to understand why they would give you a hard time about it. But for me, I know I wouldn't carry it that long IMO.

Re: AMEX: How much above minimum payment to avoid trouble?

Trivolve — Mon, 17 Mar 2014 02:59:30 GMT

oops i made a typo. the promo APR ends dec'2014 so so i have 9 more months. i think 3x minimum sounds good, i would have paid off a quarter of the debt by the time the promo APR ends and i'll then make one big payment to finish it off. I guess if they do ask me about it i'm just gonna say i wanna maximize that 0% promo APR. Gonna invest or earn interest on that money in the meantime

Re: AMEX: How much above minimum payment to avoid trouble?

cashnocredit — Mon, 17 Mar 2014 03:38:01 GMT

FICO's banking analytics blog had some info that might provide insight. IIRC people that pay more than 2x the minimums were at far lower risk than people that paid the minimums. I think 3x would be a comfortable level.

Re: AMEX: How much above minimum payment to avoid trouble?

azguy13 — Mon, 17 Mar 2014 03:44:18 GMT

@cashnocredit wrote:
FICO's banking analytics blog had some info that might provide insight. IIRC people that pay more than 2x the minimums were at far lower risk than people that paid the minimums. I think 3x would be a comfortable level.

Back in 2010 or so I had a $10K limit on my Blue Sky. I racked up about $5K on it while moving across the country for a new job. I paid the minimum for 3 months while I was getting settled in and what not and after the third month is when they triggered a FR and closed my account.

So, this doesnt so much answer the question of how much more to pay, it is more of sharing my story on how I triggered a FR and was shut down.

Re: AMEX: How much above minimum payment to avoid trouble?

cashnocredit — Mon, 17 Mar 2014 04:01:26 GMT

@azguy13 wrote:
@cashnocredit wrote:
FICO's banking analytics blog had some info that might provide insight. IIRC people that pay more than 2x the minimums were at far lower risk than people that paid the minimums. I think 3x would be a comfortable level.
Back in 2010 or so I had a $10K limit on my Blue Sky. I racked up about $5K on it while moving across the country for a new job. I paid the minimum for 3 months while I was getting settled in and what not and after the third month is when they triggered a FR and closed my account.

So, this doesnt so much answer the question of how much more to pay, it is more of sharing my story on how I triggered a FR and was shut down.

This isn't a surprise based on what I read at fico.com. Even though current FICO scores don't factor this in, just balances relative to CL, there is no question that it is a big red flag and I suspect virtually all large creditors are looking at this sort of info. In the last few years lenders have started reporting payments in addition to balances so I would be very surprised if the new FICO score rolling out later this year doesn't use this data.

Re: AMEX: How much above minimum payment to avoid trouble?

score_building — Mon, 17 Mar 2014 04:41:16 GMT

Generally speaking paying >10% of outstanding balance results in a VG-Excellent repayment score with a lender.

That said, to carry any balance (including promo) for more than 3-6 months with Amex is pretty much an at your own risk proposition.

Going forward if wish to BT for a longer period, may want to consider another lender.

Re: AMEX: How much above minimum payment to avoid trouble?

Trivolve — Mon, 17 Mar 2014 05:35:46 GMT

@score_building wrote:
Generally speaking paying >10% of outstanding balance results in a VG-Excellent repayment score with a lender.
That said, to carry any balance (including promo) for more than 3-6 months with Amex is pretty much an at your own risk proposition.
Going forward if wish to BT for a longer period, may want to consider another lender.

Kind of makes such a long promo 0% APR pointless then, no?

Re: AMEX: How much above minimum payment to avoid trouble?

lhcole77 — Mon, 17 Mar 2014 06:06:40 GMT

Agreed. Why would a 12 month 0% promo be offered if they weren't going to allow people to use it?

Re: AMEX: How much above minimum payment to avoid trouble?

score_building — Mon, 17 Mar 2014 06:29:33 GMT

@Trivolve wrote:
@score_building wrote:
Generally speaking paying >10% of outstanding balance results in a VG-Excellent repayment score with a lender.
That said, to carry any balance (including promo) for more than 3-6 months with Amex is pretty much an at your own risk proposition.
Going forward if wish to BT for a longer period, may want to consider another lender.
Kind of makes such a long promo 0% APR pointless then, no?

It would seem that the spendcentric and PIF model is one that Amex is known for and most comfortable with. Part of your question is about acclimating to a lender's quirks, and playing them to card holder advantage...sometimes what you see isn't what you get necessarily or comes with some strings (e.g. AA trigger) attached.

I imagine old timers are generally more likely to use Amex for rewards and PIF, carrying a balance briefly, if at all- than for BT, because we know this can keep our noses clean, particularly with this issuer when looking at how they historically evaluate card holders' credit behavior.

While some will report riding a promo period out without incident, Amex is probably a bit more twitchy than some other lenders for those who carry for prolonged periods and/or min pay. Similarly, Amex also offers cash advances...(putting aside fees and high APR) it's not that it's pointless, just not recommended, since it may be one variable that can lead to AA.

Re: AMEX: How much above minimum payment to avoid trouble?

Trivolve — Mon, 17 Mar 2014 06:41:29 GMT

Good to know. I'll definitely thread lightly - prob will just pay 3x minimum and if they call me I'll just PIF immediately. My AMEX lines are important to me since together they're more than 2x my total CL from my other cards.

BTW it's not a BT, it's just a large $4k purchase i recently made.

Re: AMEX: How much above minimum payment to avoid trouble?

takeshi74 — Mon, 17 Mar 2014 12:33:25 GMT

@Trivolve wrote:
How much above minimum payment to avoid trouble?

Minimum payment really doesn't matter. Utilization (and how long your utilization remains high) does. The standard guidelines apply: 30% max, ~10% ideal.

Re: AMEX: How much above minimum payment to avoid trouble?

vwgrrc — Mon, 17 Mar 2014 15:31:56 GMT

@lhcole77 wrote:
Agreed. Why would a 12 month 0% promo be offered if they weren't going to allow people to use it?

I agree too.

Can someone confirm that paying min. during intro APR also cause trouble?

Re: AMEX: How much above minimum payment to avoid trouble?

score_building — Mon, 17 Mar 2014 16:17:38 GMT

@vwgrrc wrote:
@lhcole77 wrote:
Agreed. Why would a 12 month 0% promo be offered if they weren't going to allow people to use it?
I agree too.

Can someone confirm that paying min. during intro APR also cause trouble?

It's YMMV. As cashnocredit refers to above from FICO's banking analytics blog, paying the min portrays a higher risk card holder. This behavior is monitored closely by a lender, in connection with a host of other factors. May or may not cause them to move to act. Paying as much as one can more than the min is prudent when possible (ideally at least 10% of outstansing balance) since it can elevate repayment score and reduce the odds of min pay becoming an issue over time.

Re: AMEX: How much above minimum payment to avoid trouble?

Anonymous — Mon, 17 Mar 2014 16:43:54 GMT

Based on recent comments by Amex executives about the upcoming everyday card, they seem to be more open to getting more revenue from interest fees. So maybe Amex is changing their risk algorithms, at least for that card.

That being said, Amex is still a spend centric PIF lender for the most part. If you want to avoid trouble / hassle, then don't try your luck. If you are comfortable with a FR, then by all means do whatever you deem fit.

Re: AMEX: How much above minimum payment to avoid trouble?

score_building — Mon, 17 Mar 2014 16:50:52 GMT

I doubt their comments can be construed as paying the min will be overlooked (by their risk analytics) on the new product.

Re: AMEX: How much above minimum payment to avoid trouble?

Kayo — Mon, 17 Mar 2014 17:27:55 GMT

I think Amex, given the nature of their lending practices, have to be very conservative with their risk profile. Anytime an account can go from a $3000 opening credit limit to $25,000 in under a year is incredibly risky for any lender.

Amex makes their money from swipe fee's and membership fee's. Interest charges are risky and not their main focus. They'll keep you around with a high balance IF you can remove some of the risk by verifying your financial ability to repay. If not, then your customer profile doesn't fit their business model and they'll close the account.

Offering 0% and high credit limits are just ways for them to compete with other credit cards. They still expect you to pay off your balance quickly and keep spending.

Re: AMEX: How much above minimum payment to avoid trouble?

PNut08 — Mon, 17 Mar 2014 18:05:40 GMT

I really think it depends on what % util. you have on the card and for how long. Also, you can call AmEx and let them know. For example, I'm about to execute a cross country move for the navy. I called Amex and gave them dates for our move because my spouse and I will be using the cards in multiple states over a short time period (~9 days). During that phone call, the CSR asked if I had an idea about how much of my CL would be in use and asked about an idea for the pay off timeline. I said we would use about 50% of the CL and it would be paid off within a month of when I arrive at my new command (our travel allowances are disbursed once we check into the new command). The CSR said she was noting it on my account and that it was no problem. Also, this card is brand new and within a month I will have in use 50% of my $6k CL as a new account holder. The CSR noted it on my account and said it's no problem.

Re: AMEX: How much above minimum payment to avoid trouble?

Anonymous — Mon, 17 Mar 2014 23:46:13 GMT

@PNut08 wrote:
I really think it depends on what % util. you have on the card and for how long. Also, you can call AmEx and let them know. For example, I'm about to execute a cross country move for the navy. I called Amex and gave them dates for our move because my spouse and I will be using the cards in multiple states over a short time period (~9 days). During that phone call, the CSR asked if I had an idea about how much of my CL would be in use and asked about an idea for the pay off timeline. I said we would use about 50% of the CL and it would be paid off within a month of when I arrive at my new command (our travel allowances are disbursed once we check into the new command). The CSR said she was noting it on my account and that it was no problem. Also, this card is brand new and within a month I will have in use 50% of my $6k CL as a new account holder. The CSR noted it on my account and said it's no problem.

This is encouraging news if you for some reason have to keep a balance on your AMEX. In fact, you can call in and offer this information to other, less strict banks as well.

Credit is there to be used, and yes, that means you will sometimes have to carry a balance.

Re: AMEX: How much above minimum payment to avoid trouble?

improvingmycredit — Tue, 18 Mar 2014 00:13:29 GMT

@Anonymous wrote:
Based on recent comments by Amex executives about the upcoming everyday card, they seem to be more open to getting more revenue from interest fees. So maybe Amex is changing their risk algorithms, at least for that card.

+1 to this. :-)

I've read several new articles out about Amex treading into improving their revenue though a change in their lending pracitces- primarily interest revenue.

Regardless of this, I think that Amex won't take AA against you for utilizing their 0% Promos as long as you are current with your payments (not just with them but with all lenders) and you are making larger than the minimum payments (with all lenders). As a poster suggested- if you are paying at least 10% of the balance and current along with keeping utility low amongst all your accounts, you should have no problems with Amex. Just my take. Hope this helps.