AMEX: How much above minimum payment to avoid trouble?

[Trivolve]

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!

[Rhaeny]

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@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!

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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.

[Trivolve]

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 

[cashnocredit]

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.

[azguy13]

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@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.

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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.

[cashnocredit]

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@azguy13 wrote:

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@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.

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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.

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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.

[score_building]

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.

[Trivolve]

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@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.

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

[lhcole77]

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

[score_building]

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@Trivolve wrote:

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@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.

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

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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.