Chase, Balance Chasing and Closing Accounts.

[ThomasJNewton]

A friend of mine has three Chase accounts:

• Sapphire Preferred 8 years 1 month old, current balance $561, limit $5,100.
• Freedom 8 years 3 months old, current balance $3754, limit $6,500.
• United Explorer 8 years 3 months old, current balance $12,395, limit $15,000.

He has some other cards, including:

• Discover 9 years old, $9,000 out of $20,000
• NFCU 6 years old, $12,000 out of $15,000

and:

• BofA 8 years old, $0 of $7,000
• CapOne 8 year old, $0 of $10,500.

He had balances on all of them, and has been steadily paying them off.

In 2020, he paid a lot of his Sapphire card and they balance chased him down from ~$14,000 to the $5,100. He has no late payments, and for the last year or so has been paying them done consistently. 

He has been concerned about two things, being balance chased further and having the accounts closed if he pays them off. Because of his fear that the will close his Chase accounts, he has been paying them down more slowly than the other cards, with the theory that they can see he has a fair amount of available credit, so he is not clearing spaces for a spending spree before a bankruptcy filing. The accounts that are now zero have been at zero for at least 3 months, and the Discover has been dropping most quickly right now (over $1,000 a month).

What he is trying to figure out is:

1. How concerned should he be about them closing one or more accounts once he has paid them off?
2. How concerned should he be about them balance chasing him?
3. Is there any better strategy for him than the one he is using?

Thanks in advance.

[SouthJamaica]

I can't imagine any strategy better than what he's doing.

As to being concerned about the possibility of adverse action, there's no way to avoid that possibility. But by paying things down I think he's reducing, rather than increasing, the likelihood of AA.

[CorpCrMgr1]

I'd pay off the Saphire Preferred and see what happens. By paying off his accounts the credit score should rise making your friend more credit worthy.  Remember, 2020 was the beginning of Covid and a lot of CL were dropping.

[Brian_Earl_Spilner]

If you want to see if Chase will balance chase, make a large payment, say around 1000 and see what happens. I wouldn't slow pay chase though. They have a habit of following up. 

[JoeRockhead]

The two big red flags here, and likely the culprit behind any further AA are going to be the NFCU and the United Explorer balances. I'd recommend he concentrate on getting those two below 70% as soon as possible to start with, then work from there.

[ptatohed]

If the Sapphire Preferred is down to a balance of $561 and the current limit is $5100, it appears that perhaps the chasing has stopped?

But, honesty, if I were your friend and I had those kind of balances at those kind of interest rates, on some cards with annual fees, my first concern would not be my Chase limits or closures.  

[youngandcreditwrthy]

@ThomasJNewton 

If friend is paying them off in a timely manner and is keeping FICO scores 660+, they will eventually stop with the balance chasing and he might be able to get them CLI'ed instead. Ask for soft pull CLIs (which I know sounds conterintuitive)

Some banks will also reinstate limits.. remember there is language in most T&Cs that says "from time to time we may increase or decrese your available credit"

both situations happen CLD and CLI.

2) if friend is paying them down, the worst may have passed. 

3) it's a tough situation because if you make larger payments, it can cause CLD. I don't think there is a better strategy, but I'd consider asking for the CLs to be reinstated if indeed there is zero delinquency and scores are 660+

your friend shouldn't have ever let utilization get that high even if they had to open other credit cards with larger lines to pad utilization. Bank of america could be a good balance transfer option to lower utilization and get 0% for the 12-15 months spent paying down the debt.

Have they considered a balance transfer? The interest on those balances can't be good even if they're being paid off at a rapid pace.

a new card would LOWER utilization, possibly increase score. I know that sounds contrarian, but I've never experienced CLD from Chase and I've been up to 150k in cc debt, of which 40k was with chase, and I paid it all off with balance transfers and kept my utilization below 30% the whole time.

when your friend comes out of the other side of this, I see some CLIs in their future. OTOH, if overspending was/is a problem, that must be checked immediately (and trust me I know overspending on necessities isn't fun either ahem inflation)

Did anything bad pop up on their credit report? often banks blindly respond to credit score changes. so if he had a 700 and suddenly dropped to 600, that could be a red flag or if payment patten changes. did he go from just making minimums to suddenly paying 1,000$ payments? Need to check their credit.

if you're going to change your pattern with payments, try to make it slow and gradual so the algorithms dont get mad.

P.S. If your friend asks chase for a CLI and they deny, they willl give the exact reasons and then that can be the focus.

[CYBERSAM]

When you are paying minimum payment on any CC for more than 6 months, that is subject to Red Flag! It could very well get AA regardless of what promotion they offered you… (Happened to me on Cap1 and Disc)

Regardless of balance, you should always pay at least double the minimum payment requirement!

As others have mentioned, some CCs are showing very high uti, to avoid AA they must be taken care of 1st.

I’m very surprised Discover has not AA the limit yet!

I would pay 3X minimum payment for all the cards, and concentrate on high uti cards immediately. Also perhaps he could BT some balance to BOA and Cap1 if there are any options available to up to 49% This could light the load on some high uti CCs

Having said all of that, tell your friend not to be discouraged and he can get the limits back once his no longer being Red Flagged.  

[Brian_Earl_Spilner]

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@ptatohed wrote:

If the Sapphire Preferred is down to a balance of $561 and the current limit is $5100, it appears that perhaps the chasing has stopped?

But, honesty, if I were your friend and I had those kind of balances at those kind of interest rates, on some cards with annual fees, my first concern would not be my Chase limits or closures.  

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Sapphire preferred's minimum limit is 5000. They basically stopped short of closing the card but that doesn't mean they won't circle around and choose that after review. 

[ThomasJNewton]

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@SouthJamaica wrote:

I can't imagine any strategy better than what he's doing.

That is good to hear.

As to being concerned about the possibility of adverse action, there's no way to avoid that possibility. But by paying things down I think he's reducing, rather than increasing, the likelihood of AA.

He paid the CapOne one and Bank of America ones first, as he did not really care what happened to them. :-) Discover had given him an CLI even with high balances, so he was not worried there either. Since they dropped his balance on the Sapphire (around $9,000 to just about $200 above his balance at the time) in 2020, I am not sure if they have done it any further. He has been making payments that alternate between a few hundred dollars (always over the minimum) and larger payments between $1,000 and $1,500. His Sapphire Preferred is now at $411 and may drop further before it reports.