topic Discover and AZEO - Beware the $2 Rule!!! in General Credit Topics

Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 14:58:58 GMT

Hello Everyone,

I hope I'm posting this in the right place. If not, then Mods please

feel free to move it to wherever you deem most appropriate.

I just got off the phone with a Discover financial rep in Utah who

explained their "$2 rule" to me that everyone needs to know about:

If your Discover balance is $2 or less when your statement closes,

then Discover zeroes out the amount and reports a zero balance

to all 3 credit bureaus. When I asked if internally Discover will know

that I would still owe them $2, the rep said No. Discover eats that cost.

Unfortunately for me, my Discover It card is the O in my AZEO strategy

(all zereos except one). I pay all of my balances in full each month, but I

let my Discover intentionally report a small balance. Last month, it was $3.

No problem whatsoever. But this month when the balance was $2, Discover

zeroed it out, reported it as $0 to all 3 bureaus, and my EX8 dropped 20 points.

This is precisely what I was trying to avoid.

The Discover rep apologized profusely, but she did stipulate that any balance

$2 or less will be reported as a zero balance. However, she did suggest that I could

make a small charge on the card > $2, call them back and Discover would submit

an off-cycle report to the bureaus. Best case, the bureaus would correct the "error"

right away. If not, the update would be reflected 30 days later in their normal reports.

Whew! What an ordeal!!! All of this fuss over 2 bucks!!! Live and learn, right??!!!

Hope this helps all of you Discover card holders out there. Enjoy the day and stay safe!

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:06:16 GMT

@Anonymous wrote:
Hello Everyone,

I hope I'm posting this in the right place. If not, then Mods please
feel free to move it to wherever you deem most appropriate.

I just got off the phone with a Discover financial rep in Utah who
explained their "$2 rule" to me that everyone needs to know about:

If your Discover balance is $2 or less when your statement closes,
then Discover zeroes out the amount and reports a zero balance
to all 3 credit bureaus. When I asked if internally Discover will know
that I would still owe them $2, the rep said No. Discover eats that cost.

Unfortunately for me, my Discover It card is the O in my AZEO strategy
(all zereos except one). I pay all of my balances in full each month, but I
let my Discover intentionally report a small balance. Last month, it was $3.
No problem whatsoever. But this month when the balance was $2, Discover
zeroed it out, reported it as $0 to all 3 bureaus, and my EX8 dropped 20 points.
This is precisely what I was trying to avoid.

The Discover rep apologized profusely, but she did stipulate that any balance
$2 or less will be reported as a zero balance. However, she did suggest that I could
make a small charge on the card > $2, call them back and Discover would submit
an off-cycle report to the bureaus. Best case, the bureaus would correct the "error"
right away. If not, the update would be reflected 30 days later in their normal reports.

Whew! What an ordeal!!! All of this fuss over 2 bucks!!! Live and learn, right??!!!
Hope this helps all of you Discover card holders out there. Enjoy the day and stay safe!

@Anonymous Interesting information and thanks for posting it.

Have you checked the running balance of your Discover online account? It would be quite unlike a lender to "eat the cost."

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:10:04 GMT

@Anonymous Yes, I have checked the running balance

on my Discover account. So did two different Discover reps

with whom I've spoken over the last 48 hrs. The first agreed

with me 100% that a $2 balance should have been reported.

Only after I spoke with the rep in Utah did she explain Discover's

$2 or less rule to me. And Yes, she did confirm that Discover

"eats that cost." Her words, not mine.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:13:20 GMT

So you're saying that at Statement Date, Discover reduced the outstanding balance on your card from $2 to $0?

Its one thing to not report a minimal balance to the credit bureaus, and quite another to absorb that balance for what could be thousands of customers.

Re: Discover and AZEO - Beware the $2 Rule!!!

AllZero — Sat, 09 May 2020 15:13:29 GMT

Thank you for sharing the data points.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:17:19 GMT

Yes @Anonymous . That is precisely what I'm saying.

My statement closes on the 6th of each month.

My balance on May 6th was $2. When I logged into

my account the next day on May 7th, the balance is $0.

And it's still $0. And Yes, my EX8 dropped 20pts as a result.

I know this is bizarre, which is exactly why I'm sharing with everyone.

Re: Discover and AZEO - Beware the $2 Rule!!!

Remedios — Sat, 09 May 2020 15:37:26 GMT

I had balances under $5.00 with discover. They did not report, but they didnt eat it either.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:43:09 GMT

@Remedios That's very strange. Like I posted before,

last month I had a $3 balance that reported with no probs.

But $2 or less is Discover's threshold. It's not a glitch, per se.

It's Discover policy as the rep in Utah very clearly explained.

In other words, I understand all of this to mean that it costs

Discover more than $2 to report a $2 or less balance to all

3 bureaus. I don't feel sorry for them at all b/c they're charging

10, 12, 14% or more for normal reportable charges that more

than make up for and cover the 2 bucks they absorb.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:46:08 GMT

@Anonymous wrote:
Yes @Anonymous . That is precisely what I'm saying.

My statement closes on the 6th of each month.
My balance on May 6th was $2. When I logged into
my account the next day on May 7th, the balance is $0.
And it's still $0. And Yes, my EX8 dropped 20pts as a result.

I know this is bizarre, which is exactly why I'm sharing with everyone.

Thanks again for the info; I hope to remember to test this when my next Discover statement closes on June 6.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:48:59 GMT

@Anonymous wrote:
@Remedios That's very strange. Like I posted before,
last month I had a $3 balance that reported with no probs.
But $2 or less is Discover's threshold. It's not a glitch, per se.
It's Discover policy as the rep in Utah very clearly explained.

In other words, I understand all of this to mean that it costs
Discover more than $2 to report a $2 or less balance to all
3 bureaus. I don't feel sorry for them at all b/c they're charging
10, 12, 14% or more for normal reportable charges that more
than make up for and cover the 2 bucks they absorb.

Not quite. If you allow a balance to report, but pay that balance off by the Payment Due Date (usually one day before Statement Close Date for Discover) they cannot charge you anything.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 15:53:12 GMT

@Anonymous Glad I could help. No doubt there will be other

myFICOers just like you who will test this as well. It's what we do.

And when you followup next month, please remind Discover

that it's Discover policy that all balances $2 or less at statement

close are automatically reduced to $0 and absorbed by Discover

at no cost to the customer. I'd be curious to learn your experience.

Re: Discover and AZEO - Beware the $2 Rule!!!

Brian_Earl_Spilner — Sat, 09 May 2020 15:55:55 GMT

Wish they would have done that with my $8 in trailing interest.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 16:02:48 GMT

While I'm sure these are valuable DP's for some, I have to wonder at what point they'll put a stop to people who only charge $2-5 per statement.

Especially if we're talking about having a sizeable CL tied up that could possibly get use with a different customer. Or in OP's case they'll simply eat it? Can't see them doing that for long before they tire of it.

Granted it may be better than an SD card that only sees a charge every six months. IDK, I guess I just don't see it. Using a card to buy just a pack of gum and bottle of water etc. all in the name of having one report a small balance. Even if i played AZEO $15-30 would be sufficient IMO. that's at least a few meals or coffees for a week. It also doen't feel like I'm playing a game.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 16:11:29 GMT

@Anonymous Point taken. If a customer pays off the balance due

on/before the due date, then no interest can be charged. But for customers

who do carry a balance, Discover very happily charges, 10, 12 14% or more.

This is what I meant when I said Discover isn't worried about absorbing 2 bucks

or less when they're making money hand over fist in their normal operations.

Re: Discover and AZEO - Beware the $2 Rule!!!

SouthJamaica — Sat, 09 May 2020 16:20:15 GMT

@Anonymous wrote:
Hello Everyone,

I hope I'm posting this in the right place. If not, then Mods please
feel free to move it to wherever you deem most appropriate.

I just got off the phone with a Discover financial rep in Utah who
explained their "$2 rule" to me that everyone needs to know about:

If your Discover balance is $2 or less when your statement closes,
then Discover zeroes out the amount and reports a zero balance
to all 3 credit bureaus. When I asked if internally Discover will know
that I would still owe them $2, the rep said No. Discover eats that cost.

Unfortunately for me, my Discover It card is the O in my AZEO strategy
(all zereos except one). I pay all of my balances in full each month, but I
let my Discover intentionally report a small balance. Last month, it was $3.
No problem whatsoever. But this month when the balance was $2, Discover
zeroed it out, reported it as $0 to all 3 bureaus, and my EX8 dropped 20 points.
This is precisely what I was trying to avoid.

The Discover rep apologized profusely, but she did stipulate that any balance
$2 or less will be reported as a zero balance. However, she did suggest that I could
make a small charge on the card > $2, call them back and Discover would submit
an off-cycle report to the bureaus. Best case, the bureaus would correct the "error"
right away. If not, the update would be reflected 30 days later in their normal reports.

Whew! What an ordeal!!! All of this fuss over 2 bucks!!! Live and learn, right??!!!
Hope this helps all of you Discover card holders out there. Enjoy the day and stay safe!

Wow, what a way to get a $2 per month rebate That's a pretty nice perk.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 16:27:16 GMT

@Anonymous You make very valid points. I understand completely.

On a broader scale, the bigger question is why FICO penalizes

people for paying in full and being financially responsible instead

of figuring out the FICO algorithm that likes a small balance at

statement closing in order to maximize scores. From a common

sense perspective, it doesn't make sense. Then again, algorithms

don't allow for common sense. It's just math. And Yes, I do suspect

that if 1,000s of Discover customers start leaving a $2 or less balance,

then Discover will stop eating the cost and simply report the balance.

But that's their policy, so we have to deal with it...

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 16:31:09 GMT

I thought this kind of thing, issuers zeroing out small balances, was well known and frequently reported here. Some people deliberately do this every month, gaining a small amount of money and feeling that they are gaming the system. The amounts vary, but often balances under $1 will get this treatment.

For the OP, AZEO shouldn't be a monthly routine, it costs money in missed float and is only needed (if at all) when you are about to app or want a CLI. The $2 you got from discover are much more valuableSee than a missed AZEO month!

See https://www.doctorofcredit.com/small-balance-waiver-a-k-a-lots-of-free-99-cent-amazon-gcs/

From 2014 but comments at the end are from 2020

Re: Discover and AZEO - Beware the $2 Rule!!!

firefox100 — Sat, 09 May 2020 16:27:06 GMT

Why would your score drop by 20 points if Discover reports no balance to the CRB's. I pay off my Discover before it reports and my score does not drop, I do have 15 cards and last month only one card report a balance of 750 dollar balance and my scores are over 800. The Credit line on my Discover is over 29K.

Re: Discover and AZEO - Beware the $2 Rule!!!

Anonymous — Sat, 09 May 2020 16:30:27 GMT

@firefox100 If you have 15 cards and one is reporting

a $750 balance, then you are practicing AZEO. That's why

your scores aren't dropping. In my case, I tried to leave

a small balance on my Discover card of $2 while the rest

of my cards reported a $0 balance. As a result, all of my

cards reported a $0 balance, which caused my EX8 to drop.

Re: Discover and AZEO - Beware the $2 Rule!!!

SouthJamaica — Sat, 09 May 2020 16:31:17 GMT

@firefox100 wrote:

Why would your score drop by 20 points if Discover reports no balance to the CRB's. I pay off my Discover before it reports and my score does not drop, I do have 15 cards and last month only one card report a balance of 750 dollar balance and my scores are over 800. The Credit line on my Discover is over 29K.

As long as one bank card (other than a Chase card) reports a small balance, one will not be penalized. But if all cards report zero one gets a penalty in many FICO algorithms.