No lender does (or should, though admittedly some don't seem to understand the business they're in) have an issue with this: when you overpay you put more money into their account faster. This can be lent out or otherwise count towards their reserve allowing different other money to be lent out... and either way they earn additional fractional interest than if you had paid a few days later.
When you add that up in aggregate, it's probably a 7 or maybe 8 figure swing for a large bank. Not enough to make much of a difference on their balance sheet, but still a non-trivial amount.
I've done that on my card that shows a balance (BOFA) and I've never had a problem with it, though recently I just pay way ahead to zero and let natural charges float me into the 2-9% range and kick a day later payment if I get an unexpected charge. I only have the one rewards card currently anyway so it gets 98% of my regular spending anyway which makes it easy; when I have a more complicated setup, I'll absolutely do as you're doing and just pay more than is required if I need to put lipstick on my pig the following month.
@Anonymous wrote:
@Revelate wrote:No lender does (or should, though admittedly some don't seem to understand the business they're in) have an issue with this: when you overpay you put more money into their account faster. This can be lent out or otherwise count towards their reserve allowing different other money to be lent out... and either way they earn additional fractional interest than if you had paid a few days later.
When you add that up in aggregate, it's probably a 7 or maybe 8 figure swing for a large bank. Not enough to make much of a difference on their balance sheet, but still a non-trivial amount.
I've done that on my card that shows a balance (BOFA) and I've never had a problem with it, though recently I just pay way ahead to zero and let natural charges float me into the 2-9% range and kick a day later payment if I get an unexpected charge. I only have the one rewards card currently anyway so it gets 98% of my regular spending anyway which makes it easy; when I have a more complicated setup, I'll absolutely do as you're doing and just pay more than is required if I need to put lipstick on my pig the following month.
I think you're somewhat merging banking regulations with credit card companies. While we have a fractional reserve banking system, credit card companies do not have a required reserve ratio. They don't need to have a certain amount of money before they're able to say increase someone's credit limit elsewhere; the two are independent of each other.
You're correct; however, I would point out the large majority of credit card issuers or underwriters have depository accounts as well as making other loan types.
I agree not all have this, but even in a blended multi-business line organization (Chase, BOFA, et al) it counts. Even if you discount the ones that don't (Capital One to my knowledge) we can't overlook the fact that they can invest that in other ways to make money. End of the day, money in their accounts is always better than in someone else's account, very much like our own situation as customers though on a much larger scale.
My apologies for not being clearer earlier, it is pretty muddled now that I read it again.
