topic Re: Maintaining credit lines in the recession in General Credit Topics

Maintaining credit lines in the recession

Anonymous — Fri, 24 Apr 2020 15:42:00 GMT

Hello all.

Recently in the news it appears that credit issuers are starting to decreasing limits without notice. Just wondering what the best options are here to keep these lines through the recession. Would it be better to keep balances and make minimum payments or to pay off balances a leave 10% on the cards? We have Cap1, CreditOne, and Indigo with 30% utilization and are currently rebuilding if that makes any difference. Thank you for any opnions or strategies.

Re: Maintaining credit lines in the recession

Anonymous — Fri, 24 Apr 2020 15:47:15 GMT

It's probably best to pay off your cards in full for rebuild.

It's unlikely those cards would be subject to credit limit decrease or closure; they're low limits already, and you pay for some of them like Credit One/Indigo.

Re: Maintaining credit lines in the recession

Anonymous — Fri, 24 Apr 2020 16:01:35 GMT

Thank you for your suggestion. I would just hate to pay these all down then lose the limits. Looking back at 2008 it appears that happened often.

@Anonymous wrote:
It's probably best to pay off your cards in full for rebuild.

It's unlikely those cards would be subject to credit limit decrease or closure; they're low limits already, and you pay for some of them like Credit One/Indigo.

Re: Maintaining credit lines in the recession

Anonymous — Fri, 24 Apr 2020 16:11:26 GMT

I can't find the article but I read it the other day:

Sub prime lenders actually performed better in recovering from the last recession, due to the fact that their clients are usually always in a state of recession.

They don't have much of a reason to pull in their lines, since their risk levels haven't increased as much, compared to major/prime lenders. Also, those prime lenders give out much higher limits, so in past financial crisis, those higher limits posed much higher risks if defaulted on.

Here's an article about Capital One's sub-prime practices, they make a lot from many borrowers: https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers

Re: Maintaining credit lines in the recession

CYBERSAM — Fri, 24 Apr 2020 16:44:35 GMT

Try not paying minimum payments if you can help it. Many CC companies flag consecutive minimum payments and eventually decrease your CL. Always try to pay double the minimum or follow your statement full payout in three years plan.

You don't need to have a balance and pay int. It dose not help your score. As long as you have one CC reporting very little amount you should be good.

You are rebuilding so focus on that first. Reduce your balance as much as you can to avoid wasting money on high int.

Re: Maintaining credit lines in the recession

GApeachy — Fri, 24 Apr 2020 18:00:37 GMT

@Anonymous wrote:
Just wondering what the best options are here to keep these lines through the recession.

Third Option: pif

Re: Maintaining credit lines in the recession

Shooting-For-800 — Fri, 24 Apr 2020 17:58:11 GMT

Try to always pay 3x+ your minimum or 2x at the very least.

Re: Maintaining credit lines in the recession

Anonymous — Fri, 24 Apr 2020 23:16:59 GMT

I don't think there's anything a person can do to stave off CLD's or even closures during economic downturns. You just have to continue doing the norm.

This IMO is not a recession, it's merely a byproduct of what some call a pandemic. Due to the circumstances people unable to travle and are spending less because they're unsure ATM. Now if people are not able to return to work or if more layoffs happen, then we will likley suffer an actual recession.

Re: Maintaining credit lines in the recession

Remedios — Sat, 25 Apr 2020 00:32:54 GMT

@Anonymous wrote:
I don't think there's anything a person can do to stave off CLD's or even closures during economic downturns. You just have to continue doing the norm.

This IMO is not a recession, it's merely a byproduct of what some call a pandemic. Due to the circumstances people unable to travle and are spending less because they're unsure ATM. Now if people are not able to return to work or if more layoffs happen, then we will likley suffer an actual recession.

What do you mean by "some calling it pandemic"

It is a pandemic, look up a definition of one if you need to. I mean really, what would you call it?

On top of being a pandemic, it happens to be a pandemic with severe repercussions on world economy, not just USA.

@Anonymous As far as how lenders are going to behave...well, they are going to be twitchy. When you're rebuilding, those limits tend to be relatively low, so most likely nothing will happen to them

Carrying a balance wont help you any, and it can create situation worse for you, because interest on those cards is always high.

Pay in full and roll with whatever.

Re: Maintaining credit lines in the recession

KLEXH25 — Sat, 25 Apr 2020 02:02:28 GMT

Uh, yeah. It's a pandemic and the worldwide economic repercussions are pretty catastrophic. There's really no question about it.

I think taking a conservative approach is best, and hold off on applying for too many new things (if at all). PIF whenever possible or make 2-3x the minimum payment. Keep your pattern consistent and hopefully that won't raise any flags. Use cards to rebuild but don't rely on them to sustain you. That will always backfire.

Re: Maintaining credit lines in the recession

Anonymous — Tue, 28 Apr 2020 00:28:37 GMT

That's a really intersting article about Capital One you linked there. Anyone starting out or starting over should read it and thiink about it.

Re: Maintaining credit lines in the recession

Anonymous — Tue, 28 Apr 2020 00:30:44 GMT

@Anonymous wrote:
I can't find the article but I read it the other day:

Sub prime lenders actually performed better in recovering from the last recession, due to the fact that their clients are usually always in a state of recession.

They don't have much of a reason to pull in their lines, since their risk levels haven't increased as much, compared to major/prime lenders. Also, those prime lenders give out much higher limits, so in past financial crisis, those higher limits posed much higher risks if defaulted on.

Here's an article about Capital One's sub-prime practices, they make a lot from many borrowers: https://newrepublic.com/article/155212/worked-capital-one-five-years-justified-piling-debt-poor-customers

Forgot to quote it.

Re: Maintaining credit lines in the recession

Jnbmom — Tue, 28 Apr 2020 00:33:46 GMT

I would just pay in full.

But honestly with the limits being on the low end I wouldn't worry too much about them decreasing them.

And this is exactly what a pandemic is 😕