topic Re: Maxed out? in General Credit Topics

Maxed out?

Anonymous — Tue, 22 May 2007 02:30:11 GMT

Okay now what is considered maxed out and what percent of one's credit limit should they use for balance transfers? I went to FatWallet and picked up on this CitiDiamond offer and the people there were maxing out cards to 90% of their total credit limit and thought nothing of it. Each forum seems to present a different scenario. FICO says they don't look to see where your debt is located. They consider the total amount of debt overall rather than the location it seems. So why worry about being maxed out on one particular card? I am so confused about this whole matter of calculating credit utilization that I really don't know which way to go!!!

Re: Maxed out?

Anonymous — Tue, 22 May 2007 03:01:08 GMT

Go to 90% of the credit limit on anything and FICO will ding you for it.

Sounds like some of those other people believed the canard that running high balances proves your financial manhood (or womanhood) and endears you to the CC companies and Fair-Isaac. The truth is the opposite.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 04:00:23 GMT

Well looks like I'm 7 points shy of the 90% util on my CitiDiamond Card and FICO did ding me when I first balance transferred using that card. My little paltry balance of $6K is nothing to what they are transferring at FatWallet. Some are transferring $30K!! 0% for life as long as you make 2 purchases a month. One can take 5-6 years to pay off their balance though and that's not bad given the 6-12 months being offered on other cards.

Well I'm going to just keep pecking away at my balances. I understand from FICO it is better to pay down the balances and stop jumping all over the place!!

Your input is greatly appreciated and thank you for taking the time to answer me.

SandyK

Re: Maxed out?

Anonymous — Tue, 22 May 2007 04:41:15 GMT

Your best bet is indeed to pay your balances off. Pay them down, then carry only a small balance...say, $20 to $50 on cards with limits over $5000.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 04:57:16 GMT

Being maxed out on one card does cause a hit, but not as much as you might think. The people on Fatwallet who do this tend to have pretty high credit scores, and their scores would be even higher if they weren't doing this, and they do it not to build their credit scores, but to make money. I have been working Discover since 2003, I called to cancel my Discover card and they talked me out of it by offering various things, finally saying that they'd give me 0% forever on a BT. So I said OK. Loaded that one up to within $250 of the CL. They wouldn't give me a high enough CL to put that debt plus my wife's car on it, though. So we decided we were going to try to get the same deal on my wife's card, so she called them up and cancelled, and the let it go through without offering the ultimate deal. Then one day they called her up trying to get her back, offered 5.9%, she said no. Next day, they called offering the 0% deal, she said OK. Paid off her car with it, and otherwise loaded it up to within $5 of the CL. At that time, they had no BT fee and they let you make new transfers for about 4 months, so every month, I'd make the payment, then do a new BT in the amount of the payment. In 2005, they offered me a new card with 0% BT for life, 2 purchases per month, $29 fee. I reallocated CL from the old card (had some room because of making the payments for 1.5 years or so) and got it, put some other 0% BT debt onto it. The next year, they sent my wife an offer, I used this other card of hers to do a 0% BT to get a check to pay off some 0% debt of mine, to get it into her name, and then we did the Discover again. So from 2003-2006 our Discover debt didn't really go down because they kept giving us new opportunities to load it back up. My wife's Discovers are still loaded up pretty good because she reallocated limits and of course loaded on as much debt as the new card would take with the new limit. The key isn't, will doing this or that thing raise or lower your credit score, the key is, what can you do and still have your credit score high enough to do the stuff you want to do? Remember, that doing BT's isn't going to cause you any long term problems because you can easily fix any excessive damage that may occur by simply paying down whatever amount is needed. Oh, and it takes more than 5-6 years to pay a 0% for life. Way more. Because remember, the minimum payment is 2% of the balance. Every month when you make a payment, the balance decreases so 2% of the balance is a smaller amount, so your minimum payment is smaller. We used to take the difference and add it into our mortgage, but now that interest rates are better, we just let our savings build up instead. How long have you had your Diamond Card, and how many Citibank cards do you have? If you only have one, I'd go for another. When I got my first Citibank card, they didn't give me as high a credit limit as they were willing to give me, the second card filled it out. My first card, they only gave me about 60% of my total allowable limit. So if you only have one, you should think about getting a Citi Professional Card, Citi Professional Cash Card, or ATT Universal Card (without rewards, if you want to do BT). Those cards all have 0% BT for 12 months with NO FEE for BT's under the offer. And as you are no doubt aware, Citi lets you take a BT in the form of a check whenever you want to during the offer period.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 05:00:32 GMT

NewWorldMan, whenever my wife says, should we pay off our 0% debt, I say, well, we could do that, or we could just make the minimum payments, leave the money in the bank instead of giving it to the credit card companies, take out the interest we earned on the money, and throw it in the ocean. At least then it would make a splash!

Re: Maxed out?

Anonymous — Tue, 22 May 2007 05:05:15 GMT

At the risk of sounding harsh...

I think the whole round-robin serial balance transfer game is irresponsible. It's a game of financial musical chairs, and the people playing it seem to think the song is going to go on forever. Trust me: it won't, and you're going to hear dead air when you least expect it, most likely. So to anyone out there playing that game, just make sure you have a chair to sit down in when the music stops--when you lose your job, get a long-term illness, your adjustable-rate mortgage payments go from $1200 to $1650 a month, etc.

Otherwise, you're just going to be an AFB...Another Fu(dg)ed Borrower.

End of lecture.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 05:10:00 GMT

@Anonymous wrote:
NewWorldMan, whenever my wife says, should we pay off our 0% debt, I say, well, we could do that, or we could just make the minimum payments, leave the money in the bank instead of giving it to the credit card companies, take out the interest we earned on the money, and throw it in the ocean. At least then it would make a splash!

I understand where you're coming from...at this point in life.

But ask yourself, if TSHTF (and of course it can't, you've got everything under control, that's what EVERYONE thinks just as that fecal matter does its final approach to the revolving oscillator--and I speak from personal experience here so don't think I'm talking down to you) would you still feel that way? Or would you wish you'd paid off the debt, and built up a real savings account instead?

Re: Maxed out?

Anonymous — Tue, 22 May 2007 06:21:54 GMT

Yo, I've been doing this since 2002; it's now 2007, so yeah, I would say I've got everything pretty much under control. Had the Discover cards since 2003. 4 years (so far) of 0% car financing, 4 years (almost) of gradually increasing my mortgage payments at Discover's expense. Only quit increasing the mortgage payments when interest got to where it was more profitable to just pay the required mortgage payment and put the money in the bank. The key is not to be debt free; the key is, as much as possible, to have the money in the bank to pay off the debt and to earn more on the borrowed money than you're paying on it. That's not always possible, like with a house, or convenient, like with a car, but if you don't miss a payment or damage your credit score excessively, there is no downside to taking a check for which you're paying 0% and putting it in the bank and getting 5% or 6% for it. If you want to live debt free, that's fine. Me, I'd rather take money off of Citibank and keep it for a year, and then give it back to them, keeping the interest I earned in the meantime.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 20:32:55 GMT

TheNewWorldMan,

Well I'm not even in the balance transfer game to make money, but believe me I have thought about doing same. I just don't have the money to just leave in an account and make interest at this point in time. Every penney I have must go to eliminating my debt situation. I do have an emergency fund.

I am going to take a bite outta my crime and pay off some accounts and consolidate the rest in balance transfers. I'll report back on that aspect of my agenda in six months intervals. Until then I'm going to sit back and read and contribute to posts on this forum. I honestly feel people just need a boost and a plan to get started when they come to this forum. It's really up to each individual to enact their own plan. We all have different things going on in our lives and we have to act and plan accordingly.

SandyK

Re: Maxed out?

Anonymous — Tue, 22 May 2007 20:52:06 GMT

Mike,

I have a few friends who are doing the balance transfer game to make money and could care less about their credit scores. Most of them have bought cars and paid off their HELOC lines already. They purchased and paid off their cars and HELOC by using the 0% balance transfers in the beginning from all the top credit card companies!! Now that their second mortgages and car loans are paid in full, they are borrowing money at 0% to put in their high-yield savings accounts.

Well now back to your question regarding my Citibank cards. I have 3 Citicards already. The CitiDiamond I just got in March, 2007 and I quickly transferred some home remodeling to that card! I have the CitiDividend Amex Rewards Card that I really like because I get a check in the mail every time my points add up to $ $50.00 or more. CitiSimplicity is my other card and I don't see it advertised anymore.

I will be paying off two of my Citicards and sending some money to CitiDiamond to get rid of that astronomical balance! I know it's 0% for the life of the balance but it's just too high for me!

SandyK

Re: Maxed out?

MidnightVoice — Tue, 22 May 2007 20:52:35 GMT

In the end a lot comes down to personal preference, age, family situation etc. I want to carry as little debt as possible from this point onwards, and I am willing to give things up to be debt free. Things happen - like no matter how much you plan for the kids tuition, it all costs twice as much as you anticipated (eg, I was all ready, then over the 4 years of college local state tuition went up a total of 90%). Apart from the mortgage, there are going to be times when I need loans, but I want them to be as infrequent as possible and paid off as fast as I can

Re: Maxed out?

Anonymous — Tue, 22 May 2007 21:04:45 GMT

You're certainly right, MidnightVoice, things do happen and because they happen, it's important to keep some available credit somewhere and have good credit scores. I have been almost debt free; down to $4K and received a 0% balance transfer from HSBC for $15K and was about to transfer that whole $4K to them and then everything needed repairing around my house at once. My home was built 20 years ago and everything decided to not work 20 years later!! (furnace, dishwasher, garage door, washer and dryer, etc.). My two sons had to go to Iraq and their incomes immediately stopped coming into the household. $15K barely covered all the things that were happening. Even the car my jeep said "Bye".

Things happen so we have to prepare for them and do our best. We aren't bad people with debt. Just people trying to live through some difficult times and do the best with what we earn or inherit.

SandyK

Re: Maxed out?

Anonymous — Tue, 22 May 2007 21:24:40 GMT

I maxed out, had everything under control. Then I needed credit for something unexpected. No one would touch me even with perfect credit. I still owe 30 something percent. I'd say if you are going to take those great 0% offers have extra credit cards to rise your over all credit lines so you don't look like you need every cent. When I get my balances down I plan on applying for many more since I often take advantage of these low apr's. Once you go over 30% Utl over all creditors shy away. But there is nothing wrong with what you all are doing. I've done it for years and has improved my way of life.

Re: Maxed out?

Anonymous — Tue, 22 May 2007 21:54:00 GMT

ilovepizza wrote:
When I get my balances down I plan on applying for many more since I often take advantage of these low apr's.

ilovepizza - Didn't you post on another thread that you already have 20 cards????

Re: Maxed out?

Anonymous — Tue, 22 May 2007 22:12:25 GMT

@Anonymous wrote:
I maxed out, had everything under control. Then I needed credit for something unexpected. No one would touch me even with perfect credit. I still owe 30 something percent.

(Disclaimer: Please don't interpret this as picking on you, ilovepizza...I learned what follows at the School of Hard Knocks...)

These words should be read by everyone who plays the balance-transfer "free money" game and thinks "I have everything under control." That phrase, as you and I both discovered the hard way, is right up there with, "Why, they couldn't possibly even hit an elephant at this dist..."

Anytime you incur debt that you cannot immediately pay off, you are betting that nothing major will go wrong in the future. You're betting that your income will not fall, and your expenses will not rise. Murphy (we're talking Old Man Murphy of Murphy's Law fame) just loves suckers who place such bets. He loves to send a long-term illness, a plant closing, a burned-up car transmission, or some other misfortune rolling down the pike.

Re: Maxed out?

MidnightVoice — Tue, 22 May 2007 22:18:45 GMT

.......not to mention doubling of college fees when no one was looking......

Re: Maxed out?

Anonymous — Tue, 22 May 2007 23:03:53 GMT

Sankofa, how does that perpetual 0% on Citi Diamond work? Do have have to make purchases of any particular amount? Citi has this offer in a newspaper ad right now for this horrible "0% for life" on their Citi Amex Diamond. 3% fee, no cap, and it requires you to make $300 in purchases per MONTH. in order to extend the balance past 12/1/07. Now, you should be aware that they always apply payments to the 0% balance first, and none of it to ordinary balances. So say you made a $10,000 BT at 0%. OK, you make $300 in required purchases, you now have a balance of $10,300. Now, you send in a payment of let's say $300, and your balance is now $10,000 again, but you have now $9700 at 0% and $300 at 15.74%, which is what the interest rate is. Next month, make another $300 in purchases, another $300 payment, balance is now $9400 at 0% and $600 at 15.74%. And on and on, with your interest bearing balance getting bigger and bigger, and you paying more and more interest, and none of the interest bearing balance being reduced until you have paid off the entire BT. Basically all 0% BT cards work like that, so the rule is NEVER make significant purchases while you are working a BT, unless the card is also 0% on purchases. A card like this thing I'm talking about is bad news for BT. (They give you a $100 bonus and 2 points per dollar, though, so it's a good card to use, just bad for BT). If the CitiDiamond you have is like that, you are well advised to pay it off before the 0% expires, because that $300 purchase requirement makes it an illusory deal. Once you get all these Citi things paid off, you know, that will free up a lot more credit, which will sit on your report and lower your utilization. That will increase your eligibility for the next 0% offers that come along.

Re: Maxed out?

Anonymous — Wed, 23 May 2007 02:05:00 GMT

Mike,

Heck NO I don't have that offer!! $300?? NO WAY. My purchases came to $12.23 last month and that was high considering what some of my friends bought. You can buy a candy bar and a bag of chips. It has to be two separate purchases and no set amount. Some on Fats Wallet are doing the .01 through PayPal on If you want to see the offer I took, look at this: http://www.fatwallet.com/forums/messageview.php?start=140&catid=52&threadid=662414

I took the F1K7 one. My 0% bt has been extended to 12/07 too. So I can still bt at 0% until then. Only requirement is I have to continue making the two purchases until bt is paid in full.

Re: Maxed out?

Anonymous — Wed, 23 May 2007 02:09:07 GMT

Mike,

I should have warned you that it's a long post. Twenty-eight/nine pages. This offer got a lot of publicity!!

SandyK