Help me understand the buzz behind CLI's

[sarge12]

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@Anonymous wrote:

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@SouthJamaica wrote:

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@Anonymous wrote:

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@sarge12 wrote:

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@Anonymous wrote:

I have not read all 11 pages of this thread, so forgive me if this has been stated already. Your question got me thinking today, and I have a theory.  A lot of us here are rebuilders.  We did not get ourselves in the situation of needing to rebuild by being naturally patient people.  Requesting credit limit increases can help people feel like they are actively doing something now to work on their credit, rather than just waiting for time alone to heal it. It's something to do.  It generally does no harm if the requesti is a SP, and for a rebuilder, it can certainly help.

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The best advise I could give anyone rebuilding is to read everything in the learn about scores section above and know exactly what is and is not in the scoring models. Then you can focus on the ones that are in your control. Pay special attention to the ones in the 35% and 30% catagories. I will say that bad habits are what causes most people to get in credit trouble, and good credit habits is the cure. Once you start practicing good credit habits for a while, it actually becomes somewhat addictive. It becomes...well..a habit! I use to have a hard time even remembering to pay my bills. Now I sometimes become impatient waiting on charges to post so I can pay them and I pay so often that I no longer even have to know when they are due. They all get paid at least twice a month.

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Which makes little financial sense, you want to have the issuer float the money as much as possible.   Once scores are high enough, it probably time to stop the maximization game, although I admit I still sometimes pay before statement cut, although now I have about 5 balances reporting

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I strenuously disagree.

Anyone who thinks they can make money off of banks, through the use of credit cards, is operating under a delusion.

You may be appearing to be winning a few hands, but some day it will come up and bite you.

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And of course I disagree with your statement!   I was actually talking about something minor (paying on due date rather than much earlier allows you to maximize any interest or opportunity).   But in general it is easy enough to consistently use say a 2% cashback card, with auto pay set to PIF on due date, and providing you have a minimum of self control, you are indeed making small amounts of money.  (Not necessarily from the banks themselves, but the source hardly matters).

Then add in bonuses and you make some more.   Add in MS, and you can make much more with some added risks.

So not a delusion at all, again provided you enough self-control not to spend beyond your means.

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I think both approaches can work. I just prefer the peace of mind of seeing most all cards with zero balance. I agree I am certainly leaving a small amount of money on the table, but I already got most of the benefit from the 2% rewards plus extended warranties and such. The small amount of added interest I could make off of using the cc issuers money an extra 30 days for free is not worth the anxiety of knowing I still owe them....to me! I could probably save money by clipping coupons too, but is it worth the trouble...not to me! Truth is, I do not really need the money. If it is worth it to you to carry that debt to bleed a few extra pennies from the bank, that is OK too.

[SouthJamaica]

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@wasCB14 wrote:

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@SouthJamaica wrote:

I strenuously disagree.

Anyone who thinks they can make money off of banks, through the use of credit cards, is operating under a delusion.

You may be appearing to be winning a few hands, but some day it will come up and bite you.

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 Maybe you can't make money off of banks, but that doesn't mean others don't. Between price protection, travel perks, signup bonuses, and 5%+ cash back purchases I fare pretty well. I don't even MS...yet.

Not everyone on here buys stuff they can't afford, mistakes credit for emergency cash, or forgets to pay on time. Sure, a lot of people here do, and end up getting hit with fees and interest - but don't extend that behavior to everyone.

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It's kind of like coupons. You think you're saving money, until you sit back and look at what your buying pattern would be without them.

Credit cards are the same.

All the perks are designed to get you to (a) spend more (b) spend in a certain direction (c) spend soon (d) spend on certain things (e) spend with certain companies and (f) spend.

Credit card lending doesn't exist for the purpose of helping you save money

[sarge12]

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@wasCB14 wrote:

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@SouthJamaica wrote:

I strenuously disagree.

Anyone who thinks they can make money off of banks, through the use of credit cards, is operating under a delusion.

You may be appearing to be winning a few hands, but some day it will come up and bite you.

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 Maybe you can't make money off of banks, but that doesn't mean others don't. Between price protection, travel perks, signup bonuses, and 5%+ cash back purchases I fare pretty well. I don't even MS...yet.

Not everyone on here buys stuff they can't afford, mistakes credit for emergency cash, or forgets to pay on time. Sure, a lot of people here do, and end up getting hit with fees and interest - but don't extend that behavior to everyone.

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OK...maybe I'm an idiot....what does MS stand for????

[UncleB]

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@sarge12 wrote:

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@wasCB14 wrote:

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@SouthJamaica wrote:

I strenuously disagree.

Anyone who thinks they can make money off of banks, through the use of credit cards, is operating under a delusion.

You may be appearing to be winning a few hands, but some day it will come up and bite you.

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 Maybe you can't make money off of banks, but that doesn't mean others don't. Between price protection, travel perks, signup bonuses, and 5%+ cash back purchases I fare pretty well. I don't even MS...yet.

Not everyone on here buys stuff they can't afford, mistakes credit for emergency cash, or forgets to pay on time. Sure, a lot of people here do, and end up getting hit with fees and interest - but don't extend that behavior to everyone.

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OK...maybe I'm an idiot....what does MS stand for????

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MS is manufactured spending. 

It's a 'taboo' subject here on myFICO - if you want more information about it you'll have to seek it out elsewhere. 

[Anonymous]

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@SouthJamaica wrote:

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@wasCB14 wrote:

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@SouthJamaica wrote:

I strenuously disagree.

Anyone who thinks they can make money off of banks, through the use of credit cards, is operating under a delusion.

You may be appearing to be winning a few hands, but some day it will come up and bite you.

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 Maybe you can't make money off of banks, but that doesn't mean others don't. Between price protection, travel perks, signup bonuses, and 5%+ cash back purchases I fare pretty well. I don't even MS...yet.

Not everyone on here buys stuff they can't afford, mistakes credit for emergency cash, or forgets to pay on time. Sure, a lot of people here do, and end up getting hit with fees and interest - but don't extend that behavior to everyone.

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It's kind of like coupons. You think you're saving money, until you sit back and look at what your buying pattern would be without them.

Credit cards are the same.

All the perks are designed to get you to (a) spend more (b) spend in a certain direction (c) spend soon (d) spend on certain things (e) spend with certain companies and (f) spend.

Credit card lending doesn't exist for the purpose of helping you save money

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Of course credit cards are not invented by the bank to help us, they are designed to be a source of profit.    But that is in general, where the banks know enough people will carry balances, use cards where the reward is less than the portion of the swipe fee.    

But, if you know what you are doing (and jit's not very complex!) and rein in the impulse to expand spending, you can do fine.   And I think a number of us on the forum are indeed reaping some rewards.   Add in usiing portals and discounted giftcards and cashback rewards can start being meaningful.

I don't know a whole lot about extreme couponing, but it sounds like the same rules apply there, search out the coupons for products that you use anyway (e.g. don't buy 20 gallons of "Honest Bob's Nasty Sauce" just because you have a coupon!) and you can save a lot of money

[Anonymous]

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@SouthJamaica wrote:

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It's kind of like coupons. You think you're saving money, until you sit back and look at what your buying pattern would be without them.

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I think this depends on the individual.  I know plenty of people (I am one of them) that doesn't change my buying pattern at all because of coupons.  Not in a way that results in me spending more money.  Coupons for me only save me money.  For certain products that I'm not brand-loyal to I'll buy whatever brand I have the coupon for if it results in a cheaper price.  Crest vs Colgate.  Cascade vs Finish.  As long as you're buying only the items that were on your list to buy anyway, coupons aren't going to cause you to spend more.  For items like toothpaste and dish detergent though, one has a set usage on those products.  Any products that one has a set usage on of X amount per day/week/month are ideal for coupon use IMO as you won't use the product more simply because you have more of it.  It's not like some food items, snacks for example.

[driftless]

When you are rebuilding CLI's are your life blood. At least for me, once I was done rebuilding CLI's have been important for the following reasons:

1.  Simplicity.  Having high CL's allows you to meet your credit goals with fewer cards to manage.

2.  New Cards.  Having high CL's gives you a higher probablility that if you apply for another card in the future that it will have a high SL.

3.  Freedom.   Should opportunity knock, you can take advantage of it.

4.  Security.  Whether it is an unexpected vet bill or having to travel to visit sick or dying relatives on the spur of the moment, etc., you are secure in that you can take care of the ones that you love.

At least for me, YMMV, having three cards with a total CL of $50K was once my goal, now that I have surpassed that I will probably only hit the Cap One luv button every 6 months out of habit, and let the Chase cards take care of themselves.  It is interesting to read the strategies that everyone has for paying their bills.  My cards are set to auto-pay in full on the due date.  Why?  Only because it is the simplest system IMHO.  

Driftless

[sarge12]

The main reason I do not use auto-pay on my credit cards is because I monitor my cc accounts almost daily to catch fraudulant activity before it even posts. If I am on the site anyway it is very easy to pay from the site. If I used auto pay I might get lazy and miss a fraudulant pending charge because of not logging on. I know I would not be held responsible for the charges...but I want to see the crooks caught.

[Anonymous]

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@sarge12 wrote:

The main reason I do not use auto-pay on my credit cards is because I monitor my cc accounts almost daily to catch fraudulant activity before it even posts. If I am on the site anyway it is very easy to pay from the site. If I used auto pay I might get lazy and miss a fraudulant pending charge because of not logging on. I know I would not be held responsible for the charges...but I want to see the crooks caught.

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And how often do you think that happens?   Banks just write off the fraud

[sarge12]

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@Anonymous wrote:

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@sarge12 wrote:

The main reason I do not use auto-pay on my credit cards is because I monitor my cc accounts almost daily to catch fraudulant activity before it even posts. If I am on the site anyway it is very easy to pay from the site. If I used auto pay I might get lazy and miss a fraudulant pending charge because of not logging on. I know I would not be held responsible for the charges...but I want to see the crooks caught.

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And how often do you think that happens?   Banks just write off the fraud

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Yes I know that, but still I am somewhat obsessed with monitoring my accounts. Probably has a lot to do with being disabled and getting bored. I am not trying to justify the behavior or convince anyone else to do that. It is not logical...but...still...I...do...it!