Why pay more than minimum with 0% APR?

[KDKobes]

I always pay as much as I can regardless of it being 0%apr. Most creditors don’t want to see you carry a balance for long periods of time let alone make only the minimum payment. BUT it shouldn’t matter as long as you pay the balance before the 0% apr is over.
I use 0% differently...for instance my PayPal credit or Furniture Row Card always has 0% apr offers but I calculate my payments by dividing the amount I put on it over the 0% apr period to avoid interest. BUT I did take adavantage of my BBVA 0%apr recently. Instead of pulling a smaller unsecured loan right now I put the expenditure on my BBVA card & will pay the most I can until the 0% is almost up then I will do the unsecured loan....saves me a lot on interest.

[Anonymous]

Thanks for the feedback, everyone. More details on my specific situation:

* $8,000 limit on this card.

* Intended use is just for purchases in the quarterly 5% cashback categories, which max at $6,000 for the year, so not anticipating more than 75% utilization by the end of the first year intro APR. No balance transfers.

* Never carried a balance on any other card, always PIF.

* Eight other credit cards: Alliant Cashback, Barclays Uber, Capital One Quicksilver, Chase Amazon, Chase Freedom, PenFed Platinum Rewards, U.S. Bank Cash+, U.S. Bank REI.

* Typical revolving usage across all cards is $2-5k against a combined $122,000 credit limit.

* Good credit history and scores ranging 780-820 depending on model, bureau, and moment in time.

[Anonymous]

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@FlaDude wrote:

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@Anonymous wrote:

I wouldn’t really be super worried about this with Discover or Capital One, they both are very tolerant of balances carried. It’s more Chase and Amex that don’t like customers who carry a balance, particularly if it’s not going down.  

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This is definately a YMMV situation. My Amex Blue ($31k CL), Chase Amazon ($10k CL) and Slate (7k CL) were all pretty much maxed out for years and I never had any AA from any credit card companies including those. I did get a 3k auto CL on the Amazon card when I paid it off.

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Everything is YMMV. If your profile supports it, they’ll just milk you for interest endlessly. But there are plenty of data points of people opening a new card with Amex and maxing it out and getting balance chased or having CLD on their card for having high balances on other cards. Chase doesn’t seem as common but it’s not unheard of. 

Disco and Capital One are very tolerant of this behavior. Heck if you look at the interest that Capital One and Disco take in versus Chase and Amex it becomes clear that lots of interest is their business model (although not as much as Sync and Comenity lol). 

[Anonymous]

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@Anonymous wrote:

Thanks for the feedback, everyone. More details on my specific situation:

* $8,000 limit on this card.

* Intended use is just for purchases in the quarterly 5% cashback categories, which max at $6,000 for the year, so not anticipating more than 75% utilization by the end of the first year intro APR. No balance transfers.

* Never carried a balance on any other card, always PIF.

* Eight other credit cards: Alliant Cashback, Barclays Uber, Capital One Quicksilver, Chase Amazon, Chase Freedom, PenFed Platinum Rewards, U.S. Bank Cash+, U.S. Bank REI.

* Typical revolving usage across all cards is $2-5k against a combined $122,000 credit limit.

* Good credit history and scores ranging 780-820 depending on model, bureau, and moment in time.

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With that profile, you have nothing to worry about I would think. If you really are concerned about it, tossing a couple extra bucks like BBS suggested would be a smart thing to do. 

[Anonymous]

I have yet to worry about paying more than minimums on any of the money I'm floating on 0% interest cards (~$36k) to maximize my interest returns. While this can be a ymmv scenario, I've been carrying at least that much for more than a year and the only thing I've seen out of it is a higher frequency of 0% BT offers. I keep my utilization under 60% on any individual card I'm carrying a balance on and keep my overall utilazation across all of my cards under 30%. I have seen a lot of people worry about doing such on here but I have yet to personally see any negative consequence of those actions. I still apply and get my SP CLI's as well. My personal opinion is that if you just ensure you always have the money available to pay off the cards stashed in a high yield savings account then the worst that can happen is they limit chase you until it's paid off and you've still accrued whatever free interest in that timeframe. 

Again, could be ymmv but it doesn't scare or concern me in the slightest anymore. 

[Meanmchine]

@Saeren

" Disco and Capital One are very tolerant of this behavior. Heck if you look at the interest that Capital One and Disco take in versus Chase and Amex it becomes clear that lots of interest is their business model (although not as much as Sync and Comenity lol). "

Capital One doesnt mind balances as long as you make big payments.  If you only pay alittle over the minimum, you'll never a CLI from em.

[Anonymous]

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@Meanmchine wrote:

@Saeren

" Disco and Capital One are very tolerant of this behavior. Heck if you look at the interest that Capital One and Disco take in versus Chase and Amex it becomes clear that lots of interest is their business model (although not as much as Sync and Comenity lol). "

Capital One doesnt mind balances as long as you make big payments.  If you only pay alittle over the minimum, you'll never a CLI from em.

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You’ll never get a CLI from them anyway most of the time, I was just talking in terms of direct AA they aren’t known for it. 

[Anonymous]

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@Anonymous wrote:

Thanks for the feedback, everyone. More details on my specific situation:

* $8,000 limit on this card.

* Intended use is just for purchases in the quarterly 5% cashback categories, which max at $6,000 for the year, so not anticipating more than 75% utilization by the end of the first year intro APR. No balance transfers.

* Never carried a balance on any other card, always PIF.

* Eight other credit cards: Alliant Cashback, Barclays Uber, Capital One Quicksilver, Chase Amazon, Chase Freedom, PenFed Platinum Rewards, U.S. Bank Cash+, U.S. Bank REI.

* Typical revolving usage across all cards is $2-5k against a combined $122,000 credit limit.

* Good credit history and scores ranging 780-820 depending on model, bureau, and moment in time.

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2.25 percent of 6k is only $150.  I don't really see what you are gaining with your strategy. And you would have to pay income tax on the $150 of interest earnings so you would wind up with even up with less. There are ton of credit cards that you can get cash sign up bonuses for of more cash and you don't have to pay taxes on the amount. 

[frugal47374]

Let me add another datapoint.

I never pay more than the minimum on any 0% offer.  I will happily max out a card.  When SDFCU sends me a check that I can write to myself for 0%, I write it for my credit limit.  I currently have 0% deals with AMEX, Citi and SDFCU.  I just paid off a Chase one. 

I have never experienced any adverse action because of this.  (Of course, my FICO score goes up and down a lot.)

I wouldn't do this if I had any doubt that I could pay off the card when the 0% deal ended.

[Brian_Earl_Spilner]

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@FlaDude wrote:

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@Anonymous wrote:

I wouldn’t really be super worried about this with Discover or Capital One, they both are very tolerant of balances carried. It’s more Chase and Amex that don’t like customers who carry a balance, particularly if it’s not going down.  

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This is definately a YMMV situation. My Amex Blue ($31k CL), Chase Amazon ($10k CL) and Slate (7k CL) were all pretty much maxed out for years and I never had any AA from any credit card companies including those. I did get a 3k auto CL on the Amazon card when I paid it off.

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Amex works off of established behavior. If you've never let a balance report for 3 years, then let 95% report, that raises flags. If you always carry a balance they won't bat an eye as long as you make big enough payments. I don't think people get that. They're too afraid of AA.  I've let my Delta report maxed since I got it. I also pay off the statement balance every month and have had no issues. In fact, when I first got the card, I would get "friendly reminders" when I got to $100 near my limit that I should make a payment. I haven't received one in months. My plan is to show them I need quite a bit more spending power when I request a CLI. Same applies to Chase. I had them for years before my rebuild and I never had issues with carrying a balance or occasionally maxing the limit.