Maxing Out Credit Cards and Interest Rates
Post subject: Maxing Out Credit Cards and Interest Rates
Curtis Arnold, Board Monitor/ Administrator
Posted: Tue May 10, 2005 4:27 pm
This message posted by e-mail request from one of the visitors to our site:
Is it normal for most credit card companies to "max" out your credit cards, before giving credit? simply enough, if you have a card worth 5 thousand and only used 500.00, do most companies just use the 5 thousand, and go with, you,ve used your credit for their acceptance criteria.
also: my brother's card was taken over by chase (they do a lot of that) and he has a 12 thousand limit, with perfect credit, and owes 135.00 for this stellar track record, they raised his interest from 10% to 23%, thats real gratitude, he had just paid his card off. i told them, they best give him the 10% interest back or good bye, he doesn't need them, is this the proper procedure??
Best Regards,
Curtis Arnold
Board Monitor
http://www.cardratings.com
(501) 663-0314
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Tue May 10, 2005 8:14 pm
If I read between the lines correctly...
Like I have $300,000+ in available credit limits "IF" I apply for a new credit card are they going to say I owe $300,000+ just because I could???
"IF" that is the question...MAYBE is the answer
But I just got $45,000 in 2 new AMEX CARDS with over $300,000+ in available credit limits...SO THE ANSWER IS NO...or MAYBE
There is also a HIGH BALANCE and a CREDIT LIMIT listed on the credit report most of the time (if that is what you are asking)
So "IF" you have a $5,000 limit and never go over $500 they MAY or MAY NOT give you a credit limit increase and you MAY or MAY NOT ever get a $10,000+ credit card
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Daniel
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 5:38 pm
My experience is they like to see you flex your credit.
So if you have a 5K limit and only charge $500 you might see some marginal increases over a long period of time.
If however you charge the card up make large payments and pay in full some of the time you will probably get larger increases.
Credit card companies like to match your other cards limits this lets them compete for wallet space.
As to your brother.
It is common for a credit card company to reclassify purchased portfolios.
It’s likely one of two things.
One, they just applied the rate hike across the board during the acquisition.
Two they selectively applied it during the due diligence period perhaps after an account review of your brothers credit history or some type of internal profitability score and determined that he fit their 23% tier.
In either case he should contact Chase and complain, see what they can do for him.
Or he will have to reevaluate the card.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: fenster
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 6:46 pm
In a way yes. Creditors look at available unsecured credit as potential debt in its entirety. In their underwriting and assessment models they assume that you’ve accumulated and made use of all your available trade lines, remember, I say assume. And after they assume you owe your entire $300K, they evaluate your financial ability to pay back this debt. So at a particular point, large amounts of available credit become a liability rather than a blessing. The creditor will ask why is mouse asking for more credit while he has so much in untapped, unsecured lines.
let’s further examine this business of $300,0000 in available credit. If a board member in the know were to parse mouse’s $300K, he would find that this credit may amount to trade lines equaling $300K, but it’s certainly not “available.”
If one were to further consider that credit card companies are growing less patient with dormant accounts and will close them in a New York minute, the availability of mouse’s $300K begins to look less probable. Accordingly, fiddling with sub $20 charges to maintain an account which holds a $25000 line won’t impress the banks, they will be on to you, raise your rates or close the account just the same.
So total reported credit including debt is by no means available credit. You might’ve had $300K all available for you to use at one time, but not anymore. Hence if you’re an exemplary and responsible consumer with high scores, ideally your usage will be around 20%, which will revise your available credit to $240K _ if you’re exemplary of course.
Now enter crappy credit which cannot be transformed into cash by any instrument, like department stores and gas credit. If you’re using this kind of credit to account for a percentage of your available credit, again the calculations for availability are misrepresented and erroneous.
If the claim is you’ve a total of $300K in available card lines all sitting there at $0 balances for you to shine and tuck back in till kingdom come, many members on this board will be disinclined to validate such a model in today’s banking environments. Moreover, you should check and see which ones remain open.
If on the other hand the claim is you’ve a total of $300K in credit, debt and crappy credit, and only a percentage of said credit is available to you, this would resonate very logically.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Daniel
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 7:17 pm
I agree with some of your points that dormant accounts could be on the chopping block or like in MBNA's recent move to apply an annual fee to unprofitable accounts.
Personally I have over $300,000 in unsecured credit and it has been nothing but positive.
True I do use it and make sure that every creditor is rotated in to some degree.
But overall I never have more than say $25,000 to $30,000 outstanding in any month and my idea of rotating is to max a reward or take advantage of an offer.
My experience is when they see you have alternatives they tend to earn your business and give you the best rates and terms.
Curtis Arnold, Board Monitor/ Administrator
Posted: Tue May 10, 2005 4:27 pm
This message posted by e-mail request from one of the visitors to our site:
Is it normal for most credit card companies to "max" out your credit cards, before giving credit? simply enough, if you have a card worth 5 thousand and only used 500.00, do most companies just use the 5 thousand, and go with, you,ve used your credit for their acceptance criteria.
also: my brother's card was taken over by chase (they do a lot of that) and he has a 12 thousand limit, with perfect credit, and owes 135.00 for this stellar track record, they raised his interest from 10% to 23%, thats real gratitude, he had just paid his card off. i told them, they best give him the 10% interest back or good bye, he doesn't need them, is this the proper procedure??
Best Regards,
Curtis Arnold
Board Monitor
http://www.cardratings.com
(501) 663-0314
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Tue May 10, 2005 8:14 pm
If I read between the lines correctly...
Like I have $300,000+ in available credit limits "IF" I apply for a new credit card are they going to say I owe $300,000+ just because I could???
"IF" that is the question...MAYBE is the answer
But I just got $45,000 in 2 new AMEX CARDS with over $300,000+ in available credit limits...SO THE ANSWER IS NO...or MAYBE
There is also a HIGH BALANCE and a CREDIT LIMIT listed on the credit report most of the time (if that is what you are asking)
So "IF" you have a $5,000 limit and never go over $500 they MAY or MAY NOT give you a credit limit increase and you MAY or MAY NOT ever get a $10,000+ credit card
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Daniel
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 5:38 pm
My experience is they like to see you flex your credit.
So if you have a 5K limit and only charge $500 you might see some marginal increases over a long period of time.
If however you charge the card up make large payments and pay in full some of the time you will probably get larger increases.
Credit card companies like to match your other cards limits this lets them compete for wallet space.
As to your brother.
It is common for a credit card company to reclassify purchased portfolios.
It’s likely one of two things.
One, they just applied the rate hike across the board during the acquisition.
Two they selectively applied it during the due diligence period perhaps after an account review of your brothers credit history or some type of internal profitability score and determined that he fit their 23% tier.
In either case he should contact Chase and complain, see what they can do for him.
Or he will have to reevaluate the card.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: fenster
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 6:46 pm
In a way yes. Creditors look at available unsecured credit as potential debt in its entirety. In their underwriting and assessment models they assume that you’ve accumulated and made use of all your available trade lines, remember, I say assume. And after they assume you owe your entire $300K, they evaluate your financial ability to pay back this debt. So at a particular point, large amounts of available credit become a liability rather than a blessing. The creditor will ask why is mouse asking for more credit while he has so much in untapped, unsecured lines.
let’s further examine this business of $300,0000 in available credit. If a board member in the know were to parse mouse’s $300K, he would find that this credit may amount to trade lines equaling $300K, but it’s certainly not “available.”
If one were to further consider that credit card companies are growing less patient with dormant accounts and will close them in a New York minute, the availability of mouse’s $300K begins to look less probable. Accordingly, fiddling with sub $20 charges to maintain an account which holds a $25000 line won’t impress the banks, they will be on to you, raise your rates or close the account just the same.
So total reported credit including debt is by no means available credit. You might’ve had $300K all available for you to use at one time, but not anymore. Hence if you’re an exemplary and responsible consumer with high scores, ideally your usage will be around 20%, which will revise your available credit to $240K _ if you’re exemplary of course.
Now enter crappy credit which cannot be transformed into cash by any instrument, like department stores and gas credit. If you’re using this kind of credit to account for a percentage of your available credit, again the calculations for availability are misrepresented and erroneous.
If the claim is you’ve a total of $300K in available card lines all sitting there at $0 balances for you to shine and tuck back in till kingdom come, many members on this board will be disinclined to validate such a model in today’s banking environments. Moreover, you should check and see which ones remain open.
If on the other hand the claim is you’ve a total of $300K in credit, debt and crappy credit, and only a percentage of said credit is available to you, this would resonate very logically.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Daniel
Post subject: Maxing Out Credit Cards and Interest Rates
Posted: Wed May 11, 2005 7:17 pm
I agree with some of your points that dormant accounts could be on the chopping block or like in MBNA's recent move to apply an annual fee to unprofitable accounts.
Personally I have over $300,000 in unsecured credit and it has been nothing but positive.
True I do use it and make sure that every creditor is rotated in to some degree.
But overall I never have more than say $25,000 to $30,000 outstanding in any month and my idea of rotating is to max a reward or take advantage of an offer.
My experience is when they see you have alternatives they tend to earn your business and give you the best rates and terms.
