Upgrade on Inactive Credit Card Account Encourages Use
Guest: spjoink
Credit Expert (100+ Posts)
Post subject: Upgrade on Inactive Credit Card Account Encourages Use
Posted: Sat Sep 16, 2006 4:49 pm
Spjoink herby awards BIKSHU the cardratings member of the year award.
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Guest: b
Posted: Sat Sep 16, 2006 6:59 pm
Bikshu wrote:
Quote:
How about accounts not used for a certain period of time (say at least 3months)?
does it make one a "risky" consumer?
and may eventually get adverse actions?
Likewise, many times we will force an upgrade on a large number of inactive accounts for exactly the same reason. We'll add on a rewards program. We'll upgrade you from Platinum to Signature or World. That type of thing. We hope it will beat whatever card you've been using instead, and when you do call to activate the card we can ask you officially what we were doing wrong in the first place.
Bikshu does visa signature/mastercard world report credit limits to CRA? I couldn't find it anywhere, and if it doesn't, then does it mean that the upgrade from platinum would actually hurt my score?
And thank you for all your posts!
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Bikshu
Posted: Sat Sep 16, 2006 7:14 pm
Quote:
I'm wondering if you can give us some more info on what HAL Smile is looking for in the way of retail purchases. Frequent small charges? Occasional big charges? A particular mixture? More specifically, would my chances for a good offer or CLI be greater if I made a bunch of small purchases (say, $20 or less) every month or if I made a single purchase of, say, $2500, in a month?
And how does using MBNA BillPay fit in to the equation? There are no interchange fees for that. Does MBNA like people to use that feature or not? Does it help or hurt?
Finally, what about finance charges. Does HAL prefer cardholders to carry a balance now and then, not carry a balance, carry a balance every month?
I'm about to start a little investment venture where I can spend $10,000 per month on a credit card or credit cards--in a single large charge or a bunch of smaller charges. It's a purchase, not a BT. I'm trying to decide the right card or cards to use for this.
I've paid off my entire MBNA balance as the promo BT offer is coming to an end. Now I've got a credit--and the only BT offer showing in my account is 7.9% with a 3% fee, max $75...
I'm certainly no expert on interchange fees whatsoever. But, to the best of my knowledge the merchant contracts simply stipulate that the fees will be whatever specific percentage of the transaction amount. Therefore, if we assume a 1% interchange fee for the sake of argument and you make one single purchase of $2,500 it would generate $25 of revenue for the bank. Likewise, if you were to make one hundred smaller purchases all totalling $2,500 it would also generate the same $25 of revenue for the bank. So to the best of my knowledge the bank is perfectly happy no matter which scenario fits your spending habit.
It becomes a bit trickier with the bill pay feature. This is because there is only the interchange fee if the merchant (bill) whom you pay processes the card payment in a specific way. For example, I personnally use my bill pay to pay my Verizon cellular bill each month (for the WorldPoints). Verizon seems to run the card in the exact same way they would if I had gone into a Verizon store and bought a new phone using my card. So I assume it does generate an interchange fee, and this explains why I deserve to get WorldPoints for the billpay.
However, I suppose that there may be utility companies, insurance companies, etc. that could run the card differently. Honestly, I plead ignorance on what the difference may be between how they are running the card. But I guess theoretically they may run the card in such a way as it does not generate an interchange fee, and therefore may not earn WorldPoints. Again, I've never personally come across this scenario... but I can't deny it is a possibility. If we assume that this did happen, then MBNA would only stand to generate revenue if you revolved the balance and paid a finance charge. So I guess MBNA surely wants you to use bill pay, otherwise they wouldn't offer it. The possibility of you making them more money is far preferrable to no possibility of making them money if you don't use the bill pay service. Wow is that worded badly, but you get the point....
As for finance charges, of course the bank prefers if you pay them. But honestly, who cares? Personally, I'm allergic to finance charges... they give me hives, make me sneeze, and make my eyes water. I have never paid a single cent in finance charges across any of my MBNA, AmEx, Capital One, etc. accounts over the past three years. Yet I know for a fact that I use MBNA and AmEx enough that I'm still making them both quite tidy sums of change through interchange fees. Therefore, why shouldn't they be happy with me?
And keep in mind that profitibility is kept almost completely seperate from credit decisions on your account. With respect to credit line decisioning, only your financial responsibility and credit history matter to us. Its all about risk to the bank, not necessarily profitibility. Again, I have never paid MBNA a solitary cent in F/C's and I'm receiving auto CLIs on a regular basis.
If you generate an incredible amount of revenue for the bank, you may be granted what's known as "Best Customer" status. For example, remember that California doctor I mentioned in another thread a few weeks ago? She had like five or six different accounts with us, and across all of these accounts she had paid us nearly $30,000 in fees and finance charges over the past twelve months. When a CSR pulls up any of her accounts, they will see a little thing in one corner of their screen which says "Best Customer." This makes it much more likely that if she is ever charged a late fee or some other nonsense like that, we will gladly waive it with no questions asked. But as another poster mentioned, why pay a bank $30,000 just for the prospect of saving a measely $39 down the road? I agree with all of you who argue that you should only pay interest when it works to your financial benefit, which is to say very rarely.
With your upcoming venture, perhaps you should consider the Blue Cash by AmEx. Depending on where you will be doing your purchasing that 5% EDP and 1.5% on everything else is pretty decent. There's no cap on earnings and you will hit that $6,500 in necessary spending in your first month alone. Those percentages back are far preferrable to anything MBNA offers at least (which would be WorldPoints).
It sounds as if you have a Platinum card with a 7.90% APR on purchases. It also sounds as if your most recent promo rate very recently expired. Therefore, you are likely just in between promo rate offers at the moment. This would explain why you are showing a promo rate of 7.90% (which isn't really a promo rate at all if that is indeed your contract rate). In this case, just wait a couple more weeks for your next statement to close and you will likely receive whatever new promo rate we are going to throw your way. Or if you are in a hurry to get a new one, and don't want to wait for HAL to offer you one, call the BT department and see if someone will offer you a good MPRC (Manual Promotional Rate Change). Remember, their offer will likely be better than HAL's anyway, and it will definitely never be worse...
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Bikshu
Posted: Sat Sep 16, 2006 7:32 pm
Quote:
Bikshu does visa signature/mastercard world report credit limits to CRA? I couldn't find it anywhere, and if it doesn't, then does it mean that the upgrade from platinum would actually hurt my score?
And thank you for all your posts!
Yes, MBNA (and very shortly by extension BOA) is the only bank that will report your credit line no matter what. We report lines on Visa Signature, World MasterCard, and Platinum American Express cards like any other. I agree with you that in my eyes this is a very good thing as it will help 99% of people's utilization ratios to have that nice line being reported.
However, I do admit that this can actually backfire and hurt you under one very specific scenario. Lets say you do have a Visa Signature card and your credit line is $20,000. You then put a $25,000 transaction on the account, which gets approved and goes through perfectly. On the one hand you do not have to worry about any overlimit fee due to this transaction. On the other hand, your credit report would now reflect a $20k line and a high balance of $25k, which in theory should hurt your FICO. But this is the only situation in which MBNA's reporting of no pre-set spending lines can ever hurt you. And this would have happened even on your old Platinum Visa or MC as well.
Furthermore, in the case of an MBNA no pre-set spending card there is actually a relatively easy way around the above problem. You could: 1. wait for the next auto CLI or two to bump your line up past $25k or 2. call and proactively ask for a CLI to $25k (remember its always a soft pull for CLIs with MBNA). We never actively reported you as being overlimit to the CRAs. It is simply showing in the CRA's system that you are overlimit given the information that they do have (current line vs. current balance). So once they reflect the higher credit line, it will wipe out that overlimit completely. Gone forever. Never to be heard from again. Your FICO would then go right back up to where it was.
All in all, there is absolutely no good reason not to get that Visa Signature, World MC, or Platinum AmEx. If you are going to have an MBNA card, you might as well have the best we've got to offer.
Last edited by Bikshu on Sat Sep 16, 2006 7:39 pm; edited 1 time in total
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Credit Expert (100+ Posts)
Post subject: Upgrade on Inactive Credit Card Account Encourages Use
Posted: Sat Sep 16, 2006 4:49 pm
Spjoink herby awards BIKSHU the cardratings member of the year award.
_________________
Den eneste Norske Viking pa dette forum!
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: b
Posted: Sat Sep 16, 2006 6:59 pm
Bikshu wrote:
Quote:
How about accounts not used for a certain period of time (say at least 3months)?
does it make one a "risky" consumer?
and may eventually get adverse actions?
Likewise, many times we will force an upgrade on a large number of inactive accounts for exactly the same reason. We'll add on a rewards program. We'll upgrade you from Platinum to Signature or World. That type of thing. We hope it will beat whatever card you've been using instead, and when you do call to activate the card we can ask you officially what we were doing wrong in the first place.
Bikshu does visa signature/mastercard world report credit limits to CRA? I couldn't find it anywhere, and if it doesn't, then does it mean that the upgrade from platinum would actually hurt my score?
And thank you for all your posts!
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Bikshu
Posted: Sat Sep 16, 2006 7:14 pm
Quote:
I'm wondering if you can give us some more info on what HAL Smile is looking for in the way of retail purchases. Frequent small charges? Occasional big charges? A particular mixture? More specifically, would my chances for a good offer or CLI be greater if I made a bunch of small purchases (say, $20 or less) every month or if I made a single purchase of, say, $2500, in a month?
And how does using MBNA BillPay fit in to the equation? There are no interchange fees for that. Does MBNA like people to use that feature or not? Does it help or hurt?
Finally, what about finance charges. Does HAL prefer cardholders to carry a balance now and then, not carry a balance, carry a balance every month?
I'm about to start a little investment venture where I can spend $10,000 per month on a credit card or credit cards--in a single large charge or a bunch of smaller charges. It's a purchase, not a BT. I'm trying to decide the right card or cards to use for this.
I've paid off my entire MBNA balance as the promo BT offer is coming to an end. Now I've got a credit--and the only BT offer showing in my account is 7.9% with a 3% fee, max $75...
I'm certainly no expert on interchange fees whatsoever. But, to the best of my knowledge the merchant contracts simply stipulate that the fees will be whatever specific percentage of the transaction amount. Therefore, if we assume a 1% interchange fee for the sake of argument and you make one single purchase of $2,500 it would generate $25 of revenue for the bank. Likewise, if you were to make one hundred smaller purchases all totalling $2,500 it would also generate the same $25 of revenue for the bank. So to the best of my knowledge the bank is perfectly happy no matter which scenario fits your spending habit.
It becomes a bit trickier with the bill pay feature. This is because there is only the interchange fee if the merchant (bill) whom you pay processes the card payment in a specific way. For example, I personnally use my bill pay to pay my Verizon cellular bill each month (for the WorldPoints). Verizon seems to run the card in the exact same way they would if I had gone into a Verizon store and bought a new phone using my card. So I assume it does generate an interchange fee, and this explains why I deserve to get WorldPoints for the billpay.
However, I suppose that there may be utility companies, insurance companies, etc. that could run the card differently. Honestly, I plead ignorance on what the difference may be between how they are running the card. But I guess theoretically they may run the card in such a way as it does not generate an interchange fee, and therefore may not earn WorldPoints. Again, I've never personally come across this scenario... but I can't deny it is a possibility. If we assume that this did happen, then MBNA would only stand to generate revenue if you revolved the balance and paid a finance charge. So I guess MBNA surely wants you to use bill pay, otherwise they wouldn't offer it. The possibility of you making them more money is far preferrable to no possibility of making them money if you don't use the bill pay service. Wow is that worded badly, but you get the point....
As for finance charges, of course the bank prefers if you pay them. But honestly, who cares? Personally, I'm allergic to finance charges... they give me hives, make me sneeze, and make my eyes water. I have never paid a single cent in finance charges across any of my MBNA, AmEx, Capital One, etc. accounts over the past three years. Yet I know for a fact that I use MBNA and AmEx enough that I'm still making them both quite tidy sums of change through interchange fees. Therefore, why shouldn't they be happy with me?
And keep in mind that profitibility is kept almost completely seperate from credit decisions on your account. With respect to credit line decisioning, only your financial responsibility and credit history matter to us. Its all about risk to the bank, not necessarily profitibility. Again, I have never paid MBNA a solitary cent in F/C's and I'm receiving auto CLIs on a regular basis.
If you generate an incredible amount of revenue for the bank, you may be granted what's known as "Best Customer" status. For example, remember that California doctor I mentioned in another thread a few weeks ago? She had like five or six different accounts with us, and across all of these accounts she had paid us nearly $30,000 in fees and finance charges over the past twelve months. When a CSR pulls up any of her accounts, they will see a little thing in one corner of their screen which says "Best Customer." This makes it much more likely that if she is ever charged a late fee or some other nonsense like that, we will gladly waive it with no questions asked. But as another poster mentioned, why pay a bank $30,000 just for the prospect of saving a measely $39 down the road? I agree with all of you who argue that you should only pay interest when it works to your financial benefit, which is to say very rarely.
With your upcoming venture, perhaps you should consider the Blue Cash by AmEx. Depending on where you will be doing your purchasing that 5% EDP and 1.5% on everything else is pretty decent. There's no cap on earnings and you will hit that $6,500 in necessary spending in your first month alone. Those percentages back are far preferrable to anything MBNA offers at least (which would be WorldPoints).
It sounds as if you have a Platinum card with a 7.90% APR on purchases. It also sounds as if your most recent promo rate very recently expired. Therefore, you are likely just in between promo rate offers at the moment. This would explain why you are showing a promo rate of 7.90% (which isn't really a promo rate at all if that is indeed your contract rate). In this case, just wait a couple more weeks for your next statement to close and you will likely receive whatever new promo rate we are going to throw your way. Or if you are in a hurry to get a new one, and don't want to wait for HAL to offer you one, call the BT department and see if someone will offer you a good MPRC (Manual Promotional Rate Change). Remember, their offer will likely be better than HAL's anyway, and it will definitely never be worse...
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Guest: Bikshu
Posted: Sat Sep 16, 2006 7:32 pm
Quote:
Bikshu does visa signature/mastercard world report credit limits to CRA? I couldn't find it anywhere, and if it doesn't, then does it mean that the upgrade from platinum would actually hurt my score?
And thank you for all your posts!
Yes, MBNA (and very shortly by extension BOA) is the only bank that will report your credit line no matter what. We report lines on Visa Signature, World MasterCard, and Platinum American Express cards like any other. I agree with you that in my eyes this is a very good thing as it will help 99% of people's utilization ratios to have that nice line being reported.
However, I do admit that this can actually backfire and hurt you under one very specific scenario. Lets say you do have a Visa Signature card and your credit line is $20,000. You then put a $25,000 transaction on the account, which gets approved and goes through perfectly. On the one hand you do not have to worry about any overlimit fee due to this transaction. On the other hand, your credit report would now reflect a $20k line and a high balance of $25k, which in theory should hurt your FICO. But this is the only situation in which MBNA's reporting of no pre-set spending lines can ever hurt you. And this would have happened even on your old Platinum Visa or MC as well.
Furthermore, in the case of an MBNA no pre-set spending card there is actually a relatively easy way around the above problem. You could: 1. wait for the next auto CLI or two to bump your line up past $25k or 2. call and proactively ask for a CLI to $25k (remember its always a soft pull for CLIs with MBNA). We never actively reported you as being overlimit to the CRAs. It is simply showing in the CRA's system that you are overlimit given the information that they do have (current line vs. current balance). So once they reflect the higher credit line, it will wipe out that overlimit completely. Gone forever. Never to be heard from again. Your FICO would then go right back up to where it was.
All in all, there is absolutely no good reason not to get that Visa Signature, World MC, or Platinum AmEx. If you are going to have an MBNA card, you might as well have the best we've got to offer.
Last edited by Bikshu on Sat Sep 16, 2006 7:39 pm; edited 1 time in total
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
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