topic Re: How many min payments will get you red-flagged? in Credit Cards

How many min payments will get you red-flagged?

Anonymous — Tue, 18 Nov 2014 23:40:01 GMT

I was having a discussion about this with my roommate, whose also going through the motions of rebuilding his credit. Paying off my debt isn't much of an issue because I'm making good money these days. But for him, it's a much more strategized approach that requires hitting the highest APR cards first, while doing minimum payments on his other cards.

We started talking about CLIs, strategies to stay in your CCC's good graces and common mistakes that can make you appear to be a risky borrower. I personally believe that making a min payment month to month is a fast-track way to worrying your CCC.

So that got me thinking...how many consecutive min payments can you make before most banks would start to worry? One? Two? Maybe three?

Another related question: if you do burn the bridge with your CCC (due to always doing min payments), is it possible to redeem yourself?

Chances are no one will have an ironclad answer - but having a baseline "best practice" (i.e. avoid making more than three consecutive minimum payments) could be pretty useful info. For instance, if I knew that I'd burn a bridge with CapOne after making three consecutive min payments, I'd probably budget in a way where I'd PIF or pay way above the minimum by the third payment...

Re: How many min payments will get you red-flagged?

yfan — Tue, 18 Nov 2014 23:52:27 GMT

@Anonymous wrote:

So that got me thinking...how many consecutive min payments can you make before most banks would start to worry? One? Two? Maybe three?

Another related question: if you do burn the bridge with your CCC (due to always doing min payments), is it possible to redeem yourself?

As with any trouble in life, the first step to getting out of a hole is to stop digging. In this context it means that in the rebuilding stage, making minimum payments should be fine unless you are continuing to charge more on the card. If your roommate is no longer using his card to make purchases but only making minimum payments, banks are quite happy to make interest off of him.

Simply making minimum payments doesn't "burn bridges" with most creditors. American Express is a notable exception. Your roommate can also look into a personal loan, which can help him pay off the creidt card debt. Personal loans generally carry a smaller interest rate than credit cards.

Re: How many min payments will get you red-flagged?

Anonymous — Tue, 18 Nov 2014 23:54:51 GMT

Until I found this website and started learning about the ins and outs of credit just about every payment I made was minimum. On the couple cards I had (Capital One) I quickly got them up near the credit limit and stayed there. I didn't know about scores and utilization and what looked bad and what didn't. I just figured if I was making at least the monthly payment and never paid late I was doing fine. I never had any AA and even got CLI's on those two cards during all that.

Now, I'm obsessive about utilization and scores and making sure i never make minimums anymore or at least not by closing. Sometimes I'll make a minimum payment as soon as the bill comes so I know I won't forget later and be late and then I'll always make the big payment right before the statement cuts.

To to answer the question honestly though, in the past I went a whole year or more just making minimums.

Re: How many min payments will get you red-flagged?

tcbofade — Tue, 18 Nov 2014 23:55:16 GMT

kind of depends on the bank I think.

Bank of America will close your account in six months.

Ask me how I know....

Re: How many min payments will get you red-flagged?

taxi818 — Wed, 19 Nov 2014 00:07:26 GMT

@tcbofade wrote:
kind of depends on the bank I think.

Bank of America will close your account in six months.

Ask me how I know....

Ok. I'll bite. how do you know? Lol.

Re: How many min payments will get you red-flagged?

JoshNurse — Wed, 19 Nov 2014 00:12:38 GMT

@tcbofade wrote:
kind of depends on the bank I think.

Bank of America will close your account in six months.

Ask me how I know....

A bank can close an account for making the minimum payment due? I am sure many years ago I did minimum payments for years straight.

Re: How many min payments will get you red-flagged?

MarineVietVet — Wed, 19 Nov 2014 00:58:09 GMT

@Anonymous wrote:
I was having a discussion about this with my roommate, whose also going through the motions of rebuilding his credit. Paying off my debt isn't much of an issue because I'm making good money these days. But for him, it's a much more strategized approach that requires hitting the highest APR cards first, while doing minimum payments on his other cards.

We started talking about CLIs, strategies to stay in your CCC's good graces and common mistakes that can make you appear to be a risky borrower. I personally believe that making a min payment month to month is a fast-track way to worrying your CCC.

So that got me thinking...how many consecutive min payments can you make before most banks would start to worry? One? Two? Maybe three?

Another related question: if you do burn the bridge with your CCC (due to always doing min payments), is it possible to redeem yourself?

Chances are no one will have an ironclad answer - but having a baseline "best practice" (i.e. avoid making more than three consecutive minimum payments) could be pretty useful info. For instance, if I knew that I'd burn a bridge with CapOne after making three consecutive min payments, I'd probably budget in a way where I'd PIF or pay way above the minimum by the third payment...

Good question. As with many things having to do with credit it's a YMMV situation.

Luckily it's been awhile since I was only able to make minimum payments and things might have changed but I never was aware of any AA because I made only the bare minimum.

But........I can't speak about how CCC's look at this these days.

Re: How many min payments will get you red-flagged?

tcbofade — Wed, 19 Nov 2014 01:09:00 GMT

Yes, a bank can close your account for only making the minimum payment....or because you have brown eyes, or because it's raining in Tokyo.

I was THRILLED to get a BofA123 card last year with a 12 month zero percent offer for BT's and purchases on it. For a variety of reasons, DW and I are carrying a LOT of debt through 2014, and I was certainly in NO hurry to pay off the zero percent deal.

Six minimum payments later, they closed it.

When I called in, they explained that I was now a risk because I had taken on so much debt, yadda, yadda, yadda....

I explained our unique situation to the analyst who repeated that I was now a risk. I paid it off at the 11th month and now have no relationship with BofA.

Their loss.

No other CC issuer has done this to me. (Between DW and I, we have more than 50 of the darn things, and only BofA had an issue.)

Re: How many min payments will get you red-flagged?

taxi818 — Wed, 19 Nov 2014 01:32:51 GMT

@tcbofade wrote:
Yes, a bank can close your account for only making the minimum payment....or because you have brown eyes, or because it's raining in Tokyo.

I was THRILLED to get a BofA123 card last year with a 12 month zero percent offer for BT's and purchases on it. For a variety of reasons, DW and I are carrying a LOT of debt through 2014, and I was certainly in NO hurry to pay off the zero percent deal.

Six minimum payments later, they closed it.

When I called in, they explained that I was now a risk because I had taken on so much debt, yadda, yadda, yadda....

I explained our unique situation to the analyst who repeated that I was now a risk. I paid it off at the 11th month and now have no relationship with BofA.

Their loss.

No other CC issuer has done this to me. (Between DW and I, we have more than 50 of the darn things, and only BofA had an issue.)

I agree their loss. I've only paid 3x Min to discover since in Got card. Usage on their card 44%. But they still gave me cli. I thought for sure since I did not pay much in last 3 months. They would say. No soup for you. But I feel ya. I'm too chicken to try and pay minimum.

Re: How many min payments will get you red-flagged?

Anonymous — Wed, 19 Nov 2014 01:36:09 GMT

I don't believe the banks look at your minimum payments to close the account per se.

They evaluate your acceleration of debt. If you are near max on all your cards and only paying the minimum, you can pretty much except some kind of AA in a few months...whether it be the lowering of that nice 20,000 CL or closing of your account

Re: How many min payments will get you red-flagged?

tcbofade — Wed, 19 Nov 2014 01:47:41 GMT

@Anonymous wrote:
I don't believe the banks look at your minimum payments to close the account per se.

They evaluate your acceleration of debt. If you are near max on all your cards and only paying the minimum, you can pretty much except some kind of AA in a few months...whether it be the lowering of that nice 20,000 CL or closing of your account

OK.

Not sure if it matters, but ONLY BofA took adverse action against me, and it was a 3.5k card that they closed.

None of our other CC's took any action against us....well, yet anyway....we've got another 45 days to go or so....

Re: How many min payments will get you red-flagged?

Anonymous — Wed, 19 Nov 2014 01:52:38 GMT

@tcbofade wrote:
@Anonymous wrote:
I don't believe the banks look at your minimum payments to close the account per se.

They evaluate your acceleration of debt. If you are near max on all your cards and only paying the minimum, you can pretty much except some kind of AA in a few months...whether it be the lowering of that nice 20,000 CL or closing of your account
OK.

Not sure if it matters, but ONLY BofA took adverse action against me, and it was a 3.5k card that they closed.

None of our other CC's took any action against us....well, yet anyway....we've got another 45 days to go or so....

Funny you mention that. I recall someone else on this board posting an article on CreditCards.com that mentions BofA preemptively reaching out to consumers that make minimum payments consecutively for X months. Only it was under the context of "we're here to help if you're having trouble with growing debt", as opposed to "we're gonna AA the s#$% out of you"

Re: How many min payments will get you red-flagged?

tcbofade — Wed, 19 Nov 2014 02:00:16 GMT

@Anonymous wrote:
@tcbofade wrote:
@Anonymous wrote:
I don't believe the banks look at your minimum payments to close the account per se.

They evaluate your acceleration of debt. If you are near max on all your cards and only paying the minimum, you can pretty much except some kind of AA in a few months...whether it be the lowering of that nice 20,000 CL or closing of your account
OK.

Not sure if it matters, but ONLY BofA took adverse action against me, and it was a 3.5k card that they closed.

None of our other CC's took any action against us....well, yet anyway....we've got another 45 days to go or so....
Funny you mention that. I recall someone else on this board posting an article on CreditCards.com that mentions BofA preemptively reaching out to consumers that make minimum payments consecutively for X months. Only it was under the context of "we're here to help if you're having trouble with growing debt", as opposed to "we're gonna AA the s#$% out of you"

Yeah well, as I mentioned, I was pretty unhappy at the time, but we've got plenty of other cards, so it was more insulting and inconvienent than anything else...

Our debt is still accelerated....and acceleratING! and will be for the duration of 2014.

2015 will be a better year for us financially. Just gotta get TO it....

Re: How many min payments will get you red-flagged?

Anonymous — Wed, 19 Nov 2014 03:38:54 GMT

If you're worried about minimium payments flagging, then don't make minimum payments. Instead, do minimum + $1 or something trivial that makes it so you paid off more than the minimum, but you aren't really diverting money from clearing the high APR cards.