Simple Question regarding APR

[Anonymous]

Okay, I don't know the answer to this question but people here will know the answer. 

Its a question, I'm not asking YOU if my uncle made the right decision, I already know the answer, it was not a good decision.

My Uncle has several cards with very high limits and great scores. He decided to fund a business with 5 cards that he used balance transfer checks and or had the credit card deposit money directly into his checking account. All had 18 & 21 months interest free with 2% fees. Total borrowed was about 89k. This has brought his aggregate utilization to 54%. He will without a doubt in MY mind, not the creditors mind that he will pay everything back. Even if his business fails. Not going to get into the gory details of anything else.

So here are TWO questions. 

If a creditor closes one of the accounts or balance chases one of the accounts, as long as he maintains payments can they increase his APR if he is on 0% interest for 18 & 21 months? 

Also

He has three credit cards at $50k each and a 15k CLOC with NFCU that he uses and always pays in full before statement cuts and has no intention borrowing from their cards or the CLOC. Do you suppose NFCU will impose AA  because he has high utilization with other creditors.

Thanks for ya help!

[AverageJoesCredit]

Lol, I m still trying to figure out if YOU is Chinese or Korean

But seriously, I cant answer the APR thing as I'm no expert I'd assume something might be written in their TOS.

As for Navy, I wish i could be 100% certain but from my short time here reading about Navy, they seem to be pretty good so long as you dont burn them. Having the high util with them might be of concern, then again maybe not. So long as he is paying and not missing payments, I think he should be ok with Navy. His profile obviously was good enough to warrant such limits so hopefully that will carry him through this transition.

Wish the best for your Uncle and hope someone chimes in with more definitive reply

[Pikaboo-icu]

From my understanding even if a bank/cu AA's you with a balance chase, they have to honor the APR.

That APR bonus was in the contract when they app'd for the card so I'm fairly certain they're obligated to maintain it unless it's specifically noted in the contract. 

[Anonymous]

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@AverageJoesCredit wrote:
Lol, I m still trying to figure out if YOU is Chinese or Korean

But seriously, I cant answer the APR thing as I'm no expert I'd assume something might be written in their TOS.

As for Navy, I wish i could be 100% certain but from my short time here reading about Navy, they seem to be pretty good so long as you dont burn them. Having the high util with them might be of concern, then again maybe not. So long as he is paying and not missing payments, I think he should be ok with Navy. His profile obviously was good enough to warrant such limits so hopefully that will carry him through this transition.

Wish the best for your Uncle and hope someone chimes in with more definitive reply

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Your the best AJC!

[pipeguy]

Assuming that he's not a "new customer" and doesn't have a history with the lender that is a concern, I don't think he has anything to worry about from the cards/accounts he used. Some of his other accounts might get a little spooked, but I suspect that if he has $50k CL accounts, no one is going to be very concerned.

As far as if they do close the account or balance chase it, as long as he makes the agreed to payments on time the lender can't change the terms (0% or length) - a lender taking an AA based on whatever spooked them does not equal a default.

I don't think NFCU gets spooked easy, especially with a good history/customer. I periodically carry high utility on several cards as does my wife depending on various "projects" we are working on (home remodel, BT, cleaning up smaller debts, vet bills, bla bla) NFCU has never said a word  nor done anything other than giving us an almost instant home refinance at their best rate.

Yeah, the temporary utility hit is there, but thick files and a strong payment history seem to be a nice shield against AA's (except with Comenity). 

[Anonymous]

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@pipeguy wrote:

Assuming that he's not a "new customer" and doesn't have a history with the lender that is a concern, I don't think he has anything to worry about from the cards/accounts he used. Some of his other accounts might get a little spooked, but I suspect that if he has $50k CL accounts, no one is going to be very concerned.

As far as if they do close the account or balan6ce chase it, as long as he makes the agreed to payments on time the lender can't change the terms (0% or length) - a lender taking an AA based on whatever spooked them does not equal a default.

I don't think NFCU gets spooked easy, especially with a good history/customer. I periodically carry high utility on several cards as does my wife depending on various "projects" we are working on (home remodel, BT, cleaning up smaller debts, vet bills, bla bla) NFCU has never said a word  nor done anything other than giving us an almost instant home refinance at their best rate.

Yeah, the temporary utility hit is there, but thick files and a strong payment history seem to be a nice shield against AA's (except with Comenity). 

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Very good response pipeguy. He did lose almost 100 points on each bureau because 3 of the cards are maxed and brought his total utilization to over 54%.  775>678 TU   750>649 EX   760>663 EQ

He used his Discover, DCU Platinum Rewards, Penfed, Capital One and his Citi DC.

He left Chase, AMEX, NFCU, Alliant out of it. 

Personally, I think AMEX and CHASE will AA him even though they have zero balances.

I just was hoping NFCU or PENFED don't mess with him.

[K-in-Boston]

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@Anonymous wrote:

So here are TWO questions. 

If a creditor closes one of the accounts or balance chases one the accounts, as long as he maintains payments can they increase his APR if he is on 0% interest for 18 & 21 months? 

Also

He has three credit cards at $50k each and a 15k CLOC with NFCU that he uses and always pays in full before statement cuts and has no intention borrowing from their cards or the CLOC. Do you suppose NFCU will impose AA  because he has high utilization with other creditors.

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During the first year of the account being open, the CARD Act prevents any changes to the APR (for variable cards, this would be the Prime + X, where X cannot change but if the Prime Rate increases 1% during that time they could and will raise it from 14.49% to 15.49% as an example) unless there is a reason he would be hit with a penalty rate, for example not making the minimum payment, but that would be clearly spelled out in the cardholder agreement.  I am not aware of any instances where a promotional APR has been rescinded as long as the account is kept in good standing.  So during an 18-month promotional 0%, the purchase APR may be increased after a year, but the terms of the original promotional APR should remain no matter what.

I don't think NFCU takes aggressive AA with moderately heavy utilization as long as there are no other factors such as late payments, collections, etc.  For those of us maximizing our credit scores, of course we try to keep it under 30%, but 50-60% isn't usually a horrible risk factor in and of itself.

[Anonymous]

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@K-in-Boston wrote:

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@Anonymous wrote:

So here are TWO questions. 

If a creditor closes one of the accounts or balance chases one the accounts, as long as he maintains payments can they increase his APR if he is on 0% interest for 18 & 21 months? 

Also

He has three credit cards at $50k each and a 15k CLOC with NFCU that he uses and always pays in full before statement cuts and has no intention borrowing from their cards or the CLOC. Do you suppose NFCU will impose AA  because he has high utilization with other creditors.

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During the first year of the account being open, the CARD Act prevents any changes to the APR (for variable cards, this would be the Prime + X, where X cannot change but if the Prime Rate increases 1% during that time they could and will raise it from 14.49% to 15.49% as an example) unless there is a reason he would be hit with a penalty rate, for example not making the minimum payment, but that would be clearly spelled out in the cardholder agreement.  I am not aware of any instances where a promotional APR has been rescinded as long as the account is kept in good standing.  So during an 18-month promotional 0%, the purchase APR may be increased after a year, but the terms of the original promotional APR should remain no matter what.

I don't think NFCU takes aggressive AA with moderately heavy utilization as long as there are no other factors such as late payments, collections, etc.  For those of us maximizing our credit scores, of course we try to keep it under 30%, but 50-60% isn't usually a horrible risk factor in and of itself.

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His files are squeaky clean. Never any lates, delinquency or derogatory accounts. Just extremely high utilization now.

180k in credit lines, using 94k.....52% uti....

[pipeguy]

If it helps, I've run Discover up over 70% before with no AA.

A couple of years ago I had a cash flow issue while I was settling an estate, one where I had to carry/float all the expenses until the bulk of the estate sold (real estate) - I talked to DCU and explained that I'd need to basically max out the card for 3-4 months but said if that is going to be an issue, I have other accounts I can use. The answer was "your credit limit is there for you to use - all of it" and I did, probably 95%. 

I no longer do business with AmEx or Cap-1, but when I did neither cared about high utility.

I have 3 chase cards, I just use them for some auto payments like FIOS, Starbucks reloads, etc and I always pay those three in full - never tested more than maybe 30% utility with Chase.

We've had a PenFed account for over 40 years, but today I don't use any of their products since I replaced them with DCU and NFCU.

Citi won't give me a branded card, but they will give me just about any co-branded card - I have no idea why. I've run my HD card up to maybe 50% no issues.

If I run 3 or 4 cards up over 50% my usual hit is maybe 40 points I'm currently at 752 754 and 774 with just under 20% utility.

Not sure this will ease your mind, but that's my experience.

[Gollum]

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@pipeguy wrote:

A couple of years ago I had a cash flow issue while I was settling an estate, one where I had to carry/float all the expenses until the bulk of the estate sold (real estate) - I talked to DCU and explained that I'd need to basically max out the card for 3-4 months but said if that is going to be an issue, I have other accounts I can use. The answer was "your credit limit is there for you to use - all of it" and I did, probably 95%.

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That's a pleasantly reassuring attitude. 

Edit: Just to be clear, I didn't intend any sarcasm.  Using "too much" of one's credit limit is a real concern.