Carrying a balance on AMEX/Discover and Discover IT question

[Anonymous]

I just put $1,800 on my Discover card on Monday when my DW and I bought a new mattress/bed. The store offered 6 mo. 0% financing, but we opted to put it on my Discover since I have 0% APR until next April. We will easily have it paid off as we're putting $250 per month on it. Right now my UTIL is < 1% and now will be about 2% UTIL. I think initially it will lower my FICO scores but in a couple of months they should be back where they are now. I figure if Discover thinks I can PIF each month, based on my income I've given them, they miscalculated that I could PIF $13,500 with my CL each month! I'm sure AMEX is the same way, although I didn't have the BCE in my wallet on Monday night. Back when I was in severe CC debt a few years ago AMEX was fine with me carrying a $14k maxed out card because I was paying it monthly. I think you'll be just fine.

[takeshi74]

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@Anonymous wrote:

This is the first time for me carrying a balance on any card. I got the BCE with a $10k limit and the 0% intro APR. I have about $1700 on it, and I'm wondering if it will look bad for me to carry that balance?

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"AmEx hates balances" tends to be a popular meme here but AmEx, like any other creditor is concerned over utilzation and the other usual risk factors.  If there are no other concerns with your credit 1,700/10,000 = 17%.  While lower is better with utilization it is well under the 30% max and I wouldn't worry over it.

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@Anonymous wrote:

I have enough in savings to pay it off right away, but I'd rather not touch my savings account. I know carrying a balance will drop my score, but how much of an affect does it have on me applying for other AMEX products?

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No idea.  Revolving utilization is a significant factor but it's just one of many and your entire credit profile matters.  17% on a card is probably no big deal if there are no other concerns with your credit and the rest of your cards are reporting low utilization to 0 balances.  Fewer reporting balances are better for scoring -- as long as you don't get to no balances reporting.

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@Anonymous wrote:

Again though, I would carry the balance for a few months, not because I have to, but because I want to. The issue with this card is that my CL is only $2500, and from reading the forums, it would look extremely bad for my credit util to be 50%, or should I not be too worries since when looking at my overall credit util with all my other cards, it's a drop in the bucket.

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50% > 30%.  How long would it take you to get it back under 30%?  To go back to a former question you probably don't want to app while you're reporting 50% and will want to wait until you get your utilization in better shape.

[kdm31091]

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@OmarGB9 wrote:
People stress way too much on here about util and scores lol. If you plan on paying everything off in a few months anyway, it shouldn't matter too much if you choose to carry a balance. Your scores will recover as long as you pay on time and more than the minimum. As for carrying a balance with Amex, I've read that they don't like that too much, but I don't think they'd take any AA against you.

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This. Wasting time and energy stressing about util and minute drops in scores....well, all I can say is, life is too short. Relax.

Sure, if you're maxing out cards, and paying minimums, you're going down a bad road. But simply having a balance? Carrying it? Enjoying 0%? This is why credit cards exist...and it's nothing to fret about. Your score, if it does dip, will recover just fine when the util is paid down, and if the util isn't a huge percentage you will probably not even see a score drop.

[Anonymous]

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@takeshi74 wrote:

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@Anonymous wrote:

This is the first time for me carrying a balance on any card. I got the BCE with a $10k limit and the 0% intro APR. I have about $1700 on it, and I'm wondering if it will look bad for me to carry that balance?

---

"AmEx hates balances" tends to be a popular meme here but AmEx, like any other creditor is concerned over utilzation and the other usual risk factors.  If there are no other concerns with your credit 1,700/10,000 = 17%.  While lower is better with utilization it is well under the 30% max and I wouldn't worry over it.

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@Anonymous wrote:

I have enough in savings to pay it off right away, but I'd rather not touch my savings account. I know carrying a balance will drop my score, but how much of an affect does it have on me applying for other AMEX products?

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No idea.  Revolving utilization is a significant factor but it's just one of many and your entire credit profile matters.  17% on a card is probably no big deal if there are no other concerns with your credit and the rest of your cards are reporting low utilization to 0 balances.  Fewer reporting balances are better for scoring -- as long as you don't get to no balances reporting.

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@Anonymous wrote:

Again though, I would carry the balance for a few months, not because I have to, but because I want to. The issue with this card is that my CL is only $2500, and from reading the forums, it would look extremely bad for my credit util to be 50%, or should I not be too worries since when looking at my overall credit util with all my other cards, it's a drop in the bucket.

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50% > 30%.  How long would it take you to get it back under 30%?  To go back to a former question you probably don't want to app while you're reporting 50% and will want to wait until you get your utilization in better shape.

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The only "issue" on my credit report would be the number of HP's I have, which is close to 15 on Experian which everyone seems to love to pull from. It's becuse I discovered this forum/churning and signed up for cards since I was making a lot of furniture purchases. 

I don't plan on keeping my card utils high for very long, I plan on paying them both off within the next 2-3 months max. Honestly though, I'd prefer to pay it off over 6-10months just beacuse it's 0%, and one thing I've learned, it's better to keep your cash, especially if the bank if letting you borrow money for "free", because if some type of emergency ever pops up out of nowhere, cash is king (at least thats what my father has always told me). I hope I don't get ridiculed for having that outlook......

[Anonymous]

no i am with you and am 24. your "cash" is more important as long as you aren't paying to borrow. if a bank is willing to lend me $5k interest free for 2 years i will put that entire $5k in my savings account to have the "cash" and slowly pay off the loan. essentially i am paying what i have saved but it's easier to make a small monthly payment vs just get rid of all your money now when you don't need to. emergencies happen and you don't wanna pay interest on an emergency

[Anonymous]

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@kdm31091 wrote:

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@OmarGB9 wrote:
People stress way too much on here about util and scores lol. If you plan on paying everything off in a few months anyway, it shouldn't matter too much if you choose to carry a balance. Your scores will recover as long as you pay on time and more than the minimum. As for carrying a balance with Amex, I've read that they don't like that too much, but I don't think they'd take any AA against you.

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This. Wasting time and energy stressing about util and minute drops in scores....well, all I can say is, life is too short. Relax.

Sure, if you're maxing out cards, and paying minimums, you're going down a bad road. But simply having a balance? Carrying it? Enjoying 0%? This is why credit cards exist...and it's nothing to fret about. Your score, if it does dip, will recover just fine when the util is paid down, and if the util isn't a huge percentage you will probably not even see a score drop.

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I agree with both of these guys. You should be absolutely taking full advantage of 0% APR offers. Keeping a 0% APR card at a balance of < 10% is just giving away free money. I wouldn't worry about carrying a 50% balance either, as long as you're paying more than the minimum.

@@Anonymous you should pay it off over a longer time, don't rush to pay it down to zero. But not just because cash is king, but because you should be earning interest on your money while your loan is at 0%. I'd just work out a payment plan that pays off the balance gradually over the 0% period.

[jawbrkr]

I honestly dont understand credit card companies who have an issue with people carrying a balance. If they have a problem with it, why issue revolvers at all? Why not just hand people charge cards with set limits locked and require payment in full? Then anyone who doesnt pay in full gets a negative mark. Problem solved.

[Jmill79]

AmEx didnt care too much about my carring a bit over $2k (0%) when they approved my 3x CLI to $21K.  Pay more than minimums, always.

[Anonymous]

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@Jmill79 wrote:

AmEx didnt care too much about my carring a bit over $2k (0%) when they approved my 3x CLI to $21K.  Pay more than minimums, always.

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So you were carrying a balance after CLI? How long did you wait to ask for a CLI? What was your starting CL?

[Jmill79]

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@Anonymous wrote:

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@Jmill79 wrote:

AmEx didnt care too much about my carring a bit over $2k (0%) when they approved my 3x CLI to $21K.  Pay more than minimums, always.

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So you were carrying a balance after CLI? How long did you wait to ask for a CLI? What was your starting CL?

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SL was $7k, denied my initial 60 day cli request (First AmEx and I suspect they wanted to see a bit more history)  Hit 90 days and successfully got 3x cli to $21K.  And finally yes, as I said before had approx $2k balance when I hit them up at day 90.