I think some lenders see maxing out a card and PIF multiple times a month as risky. It is probably less of an issue if the lender has issued an intentionally low limit, kind of like a trial for an unprooven young cardholder. But, if a lender has issued a credit limit that it thinks is warranted based on current credit and income, multiple times maxing and PIF will certainly set off the wrong alarms.
EX:694 TU:744 EQ:777
@TheFate wrote:Does a lender frown upon you for constantly charging and PIF multiple times throughout the month just to avoid going over your UTI?
I find myself doing this quite a bit with my QS card since it only has a $500 limit... I know others say its ok to max it out and pay it off before it reports but I dont charge more than 20% EVER. I'll just pay it off then charge another 20% then repeat. Could this affect future CLI's?
I don’t think so. I do the same thing with my freedom. On my 500$ Freedom, I charge about $2,500 monthly for not missing the UR by constantly paying off the balance atleast 5 times a month before the next statement comes.
@VirtualCuriosity wrote:
@Revelate wrote:
@VirtualCuriosity wrote:
@TheFate wrote:Does a lender frown upon you for constantly charging and PIF multiple times throughout the month just to avoid going over your UTI?
I find myself doing this quite a bit with my QS card since it only has a $500 limit... I know others say its ok to max it out and pay it off before it reports but I dont charge more than 20% EVER. I'll just pay it off then charge another 20% then repeat. Could this affect future CLI's?
I often wondered about this. I would think that they don't care, so long as you are using their card? BUT, I am wondering since I did this with Discover and Chase for a year and they won't give a CLI, it does make me wonder more. I would pay in full every two weeks, sometimes even in between. It was/is just the way I budget spending money more comfortably.
It's seriously hard to predict how any lender will react to things in their data; however, they can and quite possibly will notice.
I'm not a fan of the multiple payments during a month (unless you're maxxing the card out multiple times, by all means PIF multiple times and badger the lender for a CLI while you're at it) as the vast majority of consumers simply don't do that.
That said, there's things that lenders hate a lot more, and I suspect this one is between somewhat and utterly trivial in comparison: maybe worth a *shrug* by an UW looking at it, but likely not much more than that though in an infinite universe and not knowing what their data shows, meh... I simply don't want lender attention and that's likely a peculiarity instrinsic to me: nothing to see here, exactly what you expect, move along!
Edit: on the plus side their data might show that you're at less risk of default, but if I had to guess, it probably is more indicative of paycheck to paycheck behavior.
Good points and yes, we purely speculate. I will however disagree with multiple payments being indicitive of pay to pay behavior. If there is notice to be taken at least in my case and many others I read about, I think you are right. But, I think the reason may be more related to them recognizing who is only gaining rewards and not showing them luv in monthly charges.
I'm not talking about why consumers might choose to do this, I'm simply conjecturing as to what the lenders might read into it. I think you're absolutely right regarding the consumer side but not necessarily so on the lender side (FWIW, if I were a lender, I'd *love* my customers to be paying me off weekly personally, but I'm not a lender and not certain I think like one honestly).
Anyway, "normal" people don't do this. That's nearly unarguable, the vast majority of people pay their credit card bill based on the statement, and anyone who does differently is by definition an outlier as a result.
The only place I'm aware of where multiple payments are made over a month tend to be the Payday loan space (and this might not even hold anymore as well), but when lenders see something which isn't normative, they're going to wonder, and lenders being a conservative lot and not always forward-thinking, will likely pick the most suspicious rationale as to why a customer is doing it. Getting analysis on the real data takes potentially years unfortunately to see if in aggregate those who pay weekly default less than those that don't, which is why I think the suspicious minds will win on that count based on a lack of data for the flipside.
Edit: for all I know in thinking about it I could be completely wrong on this count: I have to think that smart lenders like the customers who zealously manage their reported balances as it shows they care about their credit score which puts them into an entirely different gene pool than those who don't care at all when it comes to potential default rates; this might be viewed similarly, but when looked at by lenders as a whole, I really doubt they'd be consistent in this particular ideal. Hard to say, went full circle to where I started on this conversation haha.
@TheFate wrote:Does a lender frown upon you for constantly charging and PIF multiple times throughout the month just to avoid going over your UTI?
I find myself doing this quite a bit with my QS card since it only has a $500 limit... I know others say its ok to max it out and pay it off before it reports but I dont charge more than 20% EVER. I'll just pay it off then charge another 20% then repeat. Could this affect future CLI's?
I was intrigued by the debate that started and was curious since I had been paying multiple times too throughout the month. In my case, it was just to get back to zero balance. Your case is understandable to be able to keep utilizing the card. My case is more of a why would someone pay multiple times of they do not need to.
At any rate, I decided to contact the creditors I use and see if they would even know if it was forwned upon. So far, I have contacted Chase and Cap1. Both stated that they really do not distinguish between 1 payment or 30 payments per month. Their rules are similar in that their credit limit increases are reviewed periodically at undefined times during the year. The factors that are considered for reviews are that your account must be in good standing by making payments on time, not exceeding credit line, not paying with checks that are returned, and abiding by your customer agreement.
I know that we can still see these answers as being politically correct and as not to come right out and tell people that what they really want is for people to carry a balance, besides using their card a lot. But, we know that they are in the business of making profit. That being said, the answers so far are that they do not care. Take that for what it is worth.
Edited: - Got a hold of Discover and they say "number of payments or method is not important as long as the account is being paid on time. Barclays said same as others. How many times you pay throughout month does not matter, so long as there is one paid by the due date.
@VirtualCuriosity wrote:
At any rate, I decided to contact the creditors I use and see if they would even know if it was forwned upon. So far, I have contacted Chase and Cap1. Both stated that they really do not distinguish between 1 payment or 30 payments per month. Their rules are similar in that their credit limit increases are reviewed periodically at undefined times during the year. The factors that are considered for reviews are that your account must be in good standing by making payments on time, not exceeding credit line, not paying with checks that are returned, and abiding by your customer agreement.
I know that we can still see these answers as being politically correct and as not to come right out and tell people that what they really want is for people to carry a balance, besides using their card a lot. But, we know that they are in the business of making profit. That being said, the answers so far are that they do not care. Take that for what it is worth.
Edited: - Got a hold of Discover and they say "number of payments or method is not important as long as the account is being paid on time. Barclays said same as others. How many times you pay throughout month does not matter, so long as there is one paid by the due date.
I don't think this is true. It is true that lenders make money off of interest, but I don't think they need this to make a profit. If they did, charge cards would not exist. People who carry balances indefinitely are inherently risky. If someone was to maintain the same monthly spending level, but continually pay less than they spent, they will eventually hit their credit limit. At this point, either the spending or payment behavior needs to change immediately... if neither changes, this person will probaly start looking for more credit.... at some point, some type of catastrophic collapse is inevitable.
I think that creditors intend for their cardholders with good credit to live within their means and pay for what they charged on time. If they need to temporarily carry a balance due to whatever reason, then that option is there, but the interest is an incentive to pay that balance down.
As for the topic of hitting the credit limit and paying the unbilled charges repeatedly throughout the month, this could be an issue if the bank percieves possible payment fraud (what if the check bounces or the payment is reversed by the issuing bank) or possible manufactured spend. Some banks may perceive that they have issued a certain limit because that is the amount of risk that they are willing to take and if the monthly spend of the cardholder far exceeds that limit then it could be outside of their comfortable risk level.
Now I don't know what to do. I have a small CL and wanted to use my card for everything for the rewards (as it is my only rewards cc). I plan to app for new cc sometime during the first quarter next year I tried carrying a balance and paying more than the minimum (currently 0% until dec). I guess I can stop trying to pay the card off and use it to have one bill autopauwd with the cc and pay my bills via my debit card. I just wanted them to see why I need a CLI and I was capable of paying it off. Oh well.
