@Anonymous wrote:I never really thought about this until today, as over the years I've usually paid not only my statement balance, but my current balance a couple of days before my due date. For someone that does float a balance and does a monthly PIF of their statement balance, if they're using 50% of their credit limit they're going to be maxing out the card almost every cycle, assuming multiple payments aren't made. I've never run into this issue until this month, so I guess I never thought about it.
Take a $10,000 limit card for simple numbers here. Someone makes $5000 in purchases, utilizing 50% of their limit. Their statement cuts and $5000 reports as the balance. Next month they PIF the $5000 previous statement balance come the due date, but not before making another $5k in monthly purchases, bringing them up to their $10k limit. It would seem to me that their $10k limit card is effectively a $5k limit card at this point, as the card holder can only make $5k in purchases every month. Again, this is assuming multiple payments aren't made.
Am I looking at this the wrong way, or does it make sense? I guess my point here is that if someone consistently makes purchases in the amount of 50% or greater of their credit limit every cycle and they like to float a balance, they more or less need a CLI to keep things comfortable.
If one has a $10k credit limit and only does PIF on/near the due date, they can charge more than $5k in new expenses each month but less than $10k. See graph below based on a steady spend of $500 every 3 days. Red bars denote statement cut dates with $5k balances. The graph shows a high balance of $7.5k assuming a $5k monthly spend with a PIF 15 days (5x3) after statement date. However, each additional 3 days time to PIF reduces spend potential $500. If you wait 21 days to PIF then HB would climb to $8.5k
It looks like you could spend close to $7.5k each month (75% utilization) based on a $10k CL and PIF 15 days after statement cut date. However, spend potential on a $10k CL drops to a bit under $6.5k if you drag out payment to 21 days.
