Algorithms used by credit card companies....

[Anonymous]

I know that CCC have algorithms they use for approvals, CLI, probably more.  My question, to the point, is whether CCC track your spending within one billing cycle and look favorably or unfavorably (possibly neutral but I doubt it) on making multiple purchases off of a beginning zero balance, then PIF before the statement posts.  Plus for them:  lots of swipe fees.  Negative for them:  no interest earned.  Thank you, people.

[TheGardner]

PIF is never a bad thing. Low risk still making money per swipe. They in turn loan the new money to the next guy.

Most companies view carrying a balance as ok aswell if it is not excessive. This helps pay rewards and additional money to loan to the next guy. But it will be monitored to make sure it doesn't turn too risky (AA).

[Anonymous]

You wouldn't believe how sophisticated the algos get. They've identified a certain segment of highly profitable customers who spend 60% more if they have a positive customer experience. So companies are throwing resources to serve these customers better. Revolvers are respected by the CC companies, but don't get the huge CLIs. Companies want you to use their card most, make big payments each month and revolve some of the debt. Do that consistently and they'll lavish you with CL.

[Anonymous]

Correct that -- revolvers are the most profitable, not transactors.

[takeshi74]

---

@Anonymous wrote:

I know that CCC have algorithms they use for approvals, CLI, probably more.  My question, to the point, is whether CCC track your spending within one billing cycle and look favorably or unfavorably (possibly neutral but I doubt it) on making multiple purchases off of a beginning zero balance, then PIF before the statement posts.  Plus for them:  lots of swipe fees.  Negative for them:  no interest earned.  Thank you, people.

---

We don't know for certain one way or another.  We don't have full access to the underwriting criteria for every creditor.  All we know is that if a creditor doesn't hold your account then all they have to go on is what's on your reports as they wouldn't have access to such account activity data within a cycle.  Instead of worrying over what might or might not exist, I suggest focusing on the knowns to maintain/improve credit.  Usage may or may not help with CLI's but don't count on it to overcome the other major credit factors.

[elim]

this was posted some time ago and is a good start

risk-profitability-models

along with the good stuff on the right sidebar

get it while the gettin's good (links tend to get deleted here)

[pipeguy]

Interesting link - thanks for posting it - first time I've seen it.

[Anonymous]

I see it.  I go to the Amex when I go "big shopping".  Like the card & can PIF BEFORE it's out of processing!  They most definitely know what they're doing! 

[Anonymous]

---

@takeshi74 wrote:

---

We don't know for certain one way or another.  We don't have full access to the underwriting criteria for every creditor.  All we know is that if a creditor doesn't hold your account then all they have to go on is what's on your reports as they wouldn't have access to such account activity data within a cycle.  Instead of worrying over what might or might not exist, I suggest focusing on the knowns to maintain/improve credit.  Usage may or may not help with CLI's but don't count on it to overcome the other major credit factors.

---

Well, the reason I asked the question is that I just received 3 bank cards: two for 5k and 1 for 7k.  I have to go to a wedding in May and I have the cash to pay for it but after getting these cards, I thought I should spread the wedding costs (lots of moola) across the 3 cards then PIF.  I was just unsure as to whether letting them report a balance for May and then paying them off might be better than paying them off as soon as I got  home.

[jamesdwi]

---

@Anonymous wrote:

I know that CCC have algorithms they use for approvals, CLI, probably more.  My question, to the point, is whether CCC track your spending within one billing cycle and look favorably or unfavorably (possibly neutral but I doubt it) on making multiple purchases off of a beginning zero balance, then PIF before the statement posts.  Plus for them:  lots of swipe fees.  Negative for them:  no interest earned.  Thank you, people.

---

They don't care, they would love the guy that paid off his card each day...  Take a guy that charged $100 each day, and paid it off at the end of the day, each day they could lend out the $100 again, at a swipe fee of 3%, equals $3 per day earned.  at the end of 30 days the credit card company earns $90.  if the card holder swipes the card once, and pays at the end of the month, the card company earms a total of $3, if they let the full $100 stay on card for two months, the card company on a card with 22% interest,  company earns  $3 swipe fee plus  $1.83 interest.  $4.83  vs $90 for the guy who pays off the card everyday.  I honestly think the card company doesn't care, they make money each way, and money is cheap to borrow for banks to borrow, about 1-2% interest per year.