Carrying Balances

[dbatl14]

How much of a balance do people usually carry on their credit cards? I am asking because I have been rebuilding my credit and have been getting some CC's with some great promotionals deal 0% APR until June of next year. I usually have been making multiple payment throught out the month to just keep my utilization down to no more than 30%.

I was worrying about my score because I was trying to get differetn CC's but I pretty much got everything I wanted excpet the big dogs cards that require superb credit where I am thinking I would have to wait at least 6 - 12 month before I go applying again (I received an Amazon, Nordstrom, Barclay, CapOne QuickSilver, CapOne Spark all within a a month or two). I applied for Amex, Discover, Chase Simplicity and got declined. So I guess I am pretty much done.

So my question is at this point how my score will suffer or how it will affect my relationships with the Banks. I just want to take advantage of the 0% APR for a year, then Amazon has the 0% if paid off with 6 /12/24 months. I want to get higher CLI's with some of these cards. So I am a little bit confused as I read on several posts that if you go high then pay off quickly, you may get a CLI because it shows that you CL is inadequate but then what is the point of getting 0% when you don't use because you worry about the FICO.

How do some of you guys with the big CL's deal with it?

[Chris679]

Use the cards responsibly and pay on time. You don't have to worry about keeping CCC happy because they make money on every swipe. In my opinion people tend to make the whole process much more complicated than it needs to be. They are tools to be used in what ever way suits your needs just be responsible.

[NRB525]

If you have balances that you are paying higher interest rates on, and you get a BT 0% offer for 6, 12, 18 months or whatever, I find it is fine with the individual lender, for the long term relationship, to take 60%, 70%, maybe 80% of the CL for the BT, then pay it down at a reasonably quick pace.

I am on four of my larger cards, each started recently with 70%+ of their CL on a long term 0% BT offer, 2 for 12 months, 2 for 18 months. I'm working on paying each of them down, and have two other cards that keep sending me BT offers that I will transfer remainders on the first two that are 12 months, to get them started on different paydown paths, then by early 2016 when the other two BT offers end, kite the remainder to the other two cards (presuming they are still offering).

My experience over the years is that a lender who offers 0% or low interest BT offers, and you take the offer (pay the 3%-4% fee of course) and then show good payment history over this time, and even if you transfer it elsewhere later, they usually come back with other BT offers.

Of course, the objective should be to pay off the balances, and my experience has been generally good. Chase is a little tired of me, and two older cards were closed when they changed the terms, so it isn't a guaranteed way, it depends on the bank. But if you do get an offer and have a balance, I say use it. The relation with the bank will improve, and that is the easiest relationship to build. And, yes it is likely CLI can happen. In my case, my CL were much larger earlier, so as my balances have paid down, they have done CLD to get them to more reasonable levels, but I expect I am at the point where mid-2015 I'll look to do some CLI.

And this is nothing against others who PIF every month. I understand that, and just realize that some people have balances on their credit cards. No Interest helps pay them down faster.

Good luck!

[chrisw1968uk]

I say run with it, your scores wont be as high whilst you are carrying decent sized balances, but if you are not planning on apping for anything for a while then its no big deal - Just make sure you pay a decent amount to them every month - I personally pay 20% of my outstanding balance every month. Get the balances low before you app for anything else and you'll be fine

[chalupaman]

I do the same thing bascially. Have had all more scores in the 700s before as well and have still been able to get approved for the cards I wanted with APRs varying from as low as 12.99% on my Amex ED after the 15 month promo period is over to the crappy 24.99% Barclays gave me (def not carrying huge balances on that anytime soon). As long as you're not trying to max them all around or have some kind of huge total utilization like 60-70%, I think you'll be fine, especially if you're not applying for stuff. A lot of the stuff I have is also 0 interest right now as well (I think at least half of my cards have had those intro offers) and I still keep my total utilization under 10% each month (right now, it's at around 7%). None of my cards have utilization even near 30% either and I especially PIF on the higher interest ones as much as I can, especially the store cards. 

[lhcole77]

All of my cards which have offered me BT offers have wound up showing me love with CLI requests when I've accepted the offer and/or paid it off.

I have done well by limiting the number of cards that I have a large balance on to two, or at most three.

I have recently learned through an experiment that scores will get dinged for the amount of accounts that report of balance. Each of our profiles has a threshold and once we cross that we lose points for every new account the reports a balance.

I have yet to be CLDed on any cards that I carried a balance on and then paid off. This is because I have paid balance is off before promo period ends.

I say go for the offer if you have it. Show the companies that you can do it responsibly. And if you're not applying for anything in the next 6 to 12 months don't worry about the score or the effect.

[takeshi74]

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@dbatl14 wrote:

How much of a balance do people usually carry on their credit cards?

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Depends on who you ask.  Some don't carry balances.  Some do.  Those that do carry various amounts.  What people usually do isn't really relevant as you need to make decisions specific to your situation and goals.

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@dbatl14 wrote:

So I am a little bit confused as I read on several posts that if you go high then pay off quickly, you may get a CLI because it shows that you CL is inadequate but then what is the point of getting 0% when you don't use because you worry about the FICO.

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Usage leading to CLI's is all speculation.  CLI's are based on credit and income.  Usage may help but it's not going to make or break a CLI on its own and it's not going to overcome any significant issues that one might have with one's credit.

As for the point of 0% it's to avoid interest.  That said, you still have to consider utilization even with a 0% offer since it is considered a significant risk factor.  It's not simply a matter of one or the other being "the point".  They're both points (along with any other points that may be applicable to your specific situation) and you have to strike a balance.

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@dbatl14 wrote:

How do some of you guys with the big CL's deal with it?

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Deal with what specifically?  I am carrying balances on 0% offers but I keep an eye on utilization just as I would if my CL's were small or if I didn't have any 0% offers.  If I didn't have any 0% offers I wouldn't carry any balances.

[dbatl14]

thanks everyone.

I basically use my CC's now instead of my debit because I have gotten the BofA Cash Rewards 123, Quicksilver and Barclays Rewards. So I use my BofA for Gas and Groceries / Quicksilver for everything else since I get a 1.5% cash back on every transaction, I use Barclays for bills like utilities since they give you 2 points for that. then I pay it off.

What I have been doing to keep my utlization extra low I always paid everything before the "Statement Close" date so it would report 0 balances, but then after various research, I tried letting a small balance report to show that I am using my cards which got me into the habit never to go over a certain amount for example: if I have $1000 CL, and I get to the $300 mark, I would make a payment half or $200 and sometimes completely.

But I also like to have my bank acount to look good on "paper" for th relationship with my banks.

Yes, I don't plan to apply for anything else anytime soon. But with Christmas around the corner I would definitely like to make some purchases that I know I will pay off fairly quickly but don't want pay all up front quite yet. For example my Amazon card, I use it a lot so I do my Xmas shopping and then plan on paying it all off between 3  - 6 month just to give my "cash avaiable" some breathing room.

[Anonymous]

Great question and good info on this thread. My experience was using a US Bank LOC where I had $5,500 in an outstanding balance and their computer exploited me for such a high utilization rate out of $8K CL. So, I paid it down and off. Also got the CL increased.

[Anonymous]

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@ArmyVietVet wrote:

Great question and good info on this thread. My experience was using a US Bank LOC where I had $5,500 in an outstanding balance and their computer exploited me for such a high utilization rate out of $8K CL. So, I paid it down and off. Also got the CL increased.

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Their computer penalized (got ya Kenny ) you for less than 70% util?

Thats odd, I had carried 80-90% on my USBank VisaSig for years and years and they have never said word one about it.

OP...my rule of thumb is to never let a card get above 80% if at all possible, and NEVER EVER above 90%, which is considered the maxed out line.