Are my accounts going to be in danger if I make a large purchase?

[Anonymous]

I have been reading through some posts on the forums here, and have seen some people report companies closing their accounts for having too large of a balance across their cards.

I am getting ready to move, and will be putting about $9,000 on my cards which I plan to pay back over my 0% period of about 18 months. It will be divided among two cards, one of those cards will be close to its credit limit, and the other about 15% of the limit.

I currently also have two loans, one auto loan that I started October 2016 and a personal loan I started March 2017. This $9,000 would be the only credit card debt I have, and would put my overall utilization at around 20%. I will continue to use other cards but will PIF those cards every month. My credit profile is in my signature.

Am I in danger of card companies getting spooked and closing cards? Or reducing limits?

[Anonymous]

Which CCCs are you speaking of?  You should be fine.  I'd suggest contacting the CCC that you plan on maxing out your card with and A - requesting a CLI if it's a SP, simply stating to them what you just told us... that you're going to be moving and that the limit you currently have may not be great enough for your spend.  If you get granted the CLI, that's great and will help your utilization.  If not (or if it's a HP and you don't want to take the HP for it) they can likely place a notation on your account that you are planning on maxing out the card which could potentially help you avoid AA.  Generally speaking, AA only comes when you miss a payment or some other adverse event happens... not just because of high utilization on one card especially if your aggregate utilization is still in a "good" place of less than 29%.

[Anonymous]

It's impossible to say without knowing what your overall credit profile looks like.

The first thing to research here and on Google is if your credit card lenders offer easy CLIs without HPs.  If so, try for CLIs first -- getting bigger CLs means lower utilization.

Secondly, you want to try to NOT max out either card if possible -- try to balance it out so both cards have the same utilization % and then pay those down as fast as possible to under 49.9%.

Maxing out even one card can cause AA, but if you can get both cards equally utilized and keep both under 89.9% it greatly reduces AA from other lenders.

[SouthJamaica]

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@Anonymous wrote:

I have been reading through some posts on the forums here, and have seen some people report companies closing their accounts for having too large of a balance across their cards.

I am getting ready to move, and will be putting about $9,000 on my cards which I plan to pay back over my 0% period of about 18 months. It will be divided among two cards, one of those cards will be close to its credit limit, and the other about 15% of the limit.

I currently also have two loans, one auto loan that I started October 2016 and a personal loan I started March 2017. This $9,000 would be the only credit card debt I have, and would put my overall utilization at around 20%. I will continue to use other cards but will PIF those cards every month. My credit profile is in my signature.

Am I in danger of card companies getting spooked and closing cards? Or reducing limits?

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Nowadays I would say yes, you are in danger of card companies getting spooked and closing cards or reducing limits. So I would not let any one card report at anywhere near its credit limit.

[Anonymous]

While maxing out one card CAN cause AA, typically it doesn't so long as your payment history is sound and you don't have baddies present.

I know someone that has 9 credit cards and 7 of them are completely maxed out and have been for 6 months.  The only 2 that aren't maxed out are store cards with tiny limits.  She has not received any AA at all because she makes at least the minimum payments.  CCCs are all about making money so as long as you are making on time payments and don't have any negatives on your report to suggest you may stop making on time payments they are glad to sit back and collect that interest from you.  The profile I'm speaking of above is sitting at about 92% aggregate utilization and all FICO scores are in the 650-680 range.

[Anonymous]

+1 for ABCD2199. A lot of times, you can keep your balances and utilization from getting out of control if you can split a large purchase among cards. Many merchants will gladly do that for you if you explain what you need to do.

More generally, if you have a good history with your credit-card issuer, I'd be pretty sure they'd be happy to work with you if you talked to them in advance and explained what you needed to do and why. Paying off the balance as soon as you can also helps, of course!

[Anonymous]

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@Anonymous wrote:

CCCs are all about making money so as long as you are making on time payments and don't have any negatives on your report to suggest you may stop making on time payments they are glad to sit back and collect that interest from you.

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I'm sure a lot of AA from high utilization comes with those with a high number of inquiries along with reports sometimes showing a minimum payment made only.

It's definitely more than high utilization -- having that big combo of high util + high inq + minimum payment = greater risk of default.

[Anonymous]

I definitely plan on making at least twice the minimum payment, if not more. I will just split it across two cards, that way neither exceeds 50%. Thanks for the advice guys.

[Anonymous]

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@Anonymous wrote:

I definitely plan on making at least twice the minimum payment, if not more. I will just split it across two cards, that way neither exceeds 50%. Thanks for the advice guys.

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Perfect!  Just make sure to run the calculation properly based on your likely different credit limits on each card.  And if your card is a soft pull for CLI, try to get the CLIs first which should help you with utilization overhead.  Making more than the minimum payment should also help -- not all creditors report to all CRAs when it comes to payments made, but it helps to make more than the minimum on those that do report.

Also be aware of when each creditor reports to the CRAs -- some due it on statement date, but some do it at the end of the month, etc.

[Anonymous]

Here is how it would look:

$7,000 total purchase. I will put half on my PenFed Promise card to get the 4.99% promotion, that is 46.7% utilization. I will put the other half on my Chase Freedom card, that would be 35%.

I will also have a balance of $1,500 on my Discover card due to a gap between graduation and my job starting in June, but that will be paid almost immediately in a month or two. That would be 26.3% utilization.

I will make at least twice the minimum payment on all cards. Overall utilization at 21%.