We have one credit card with a low balance that we are using to repair credit rating. This card was originally offered with a purchase under a 12 month no-interest on original charge offer. All new charges were subject to interest. For the first few months, we carried that original balance, paying off 1/10 of the original no-interest charge and paying off in full any new charges every month to avoid paying interest. We have always paid more than the minimum payment required. Within a couple of months the limit was raised by the card issuer but not at our request. Eventually, we decided that we could earn more points, which could be used to pay toward our cell bill, if we used the card for monthly expenses. Since then we have maxed out the card several times, continuing to pay off the interest-bearing charges in full every month. After a few more months we paid off the original no-interest charge.
We have never been late on a payment, pay the bill every month like clockwork on payday (a Thursday or Friday). The few times we maxed out the available balance, the issuer put a hold on the card that was released the day we paid it or at the latest the day after.
This past month we maxed it out again, a hold was put on it, and then we paid it in full a few days later. But this time, the issuer did not release the hold even after the bill showed as paid in the online account. When we called to inquire why there was still a hold, they said it would be released on Monday (it was paid on Thursday as per usual) but did not explain why and said they could not lift it. This has never happened before. They tried to tell us initially that the payment hadn’t been cleared by our bank, but a call to our bank confirmed that they had already released the funds. Once called out on that, there was no explanation for the hold offered, but they refused to lift the hold or increase our limit despite the fact that they confirmed our credit score had improved dramatically (now mid-700s) and we were in good standing with them. So basically at this point we have just spent most of our paychecks responsibly paying off credit owed. This is why I hate credit cards.
We’re pretty angry because we had intended to use it to pay our phone bill which earns the most points and buy groceries for the weekend. Obviously, we won’t be using most of our paycheck to pay the credit card bill which we’ve been using to pay bills. We decided not cancel it but rather to stop using it for a few months to see what will happen. I feel like they are punishing us for using the card in a way that doesn’t earn them any money, so I guess we’re no big loss to them.
It seems like a pretty underhanded thing to do and I wonder if there are any regulations against arbitrary holds on credit issued.
Because we get points for every dollar we spend and we are paying it off without incurring interest so we’re fully utilizing our credit line. Since this has never been a problem, why should it be now?
Is it? Okay, I thought the hold was automatic so you couldn’t spend more. I’m okay with having a limit, I just don’t understand what’s the problem with using the full credit allowance. Should we only be using a portion of our credit allowance? The customer service rep did not indicate that the hold was a bad thing.
We are fairly new to credit cards because we have always thought it was better to just pay for things out of available cash and medical debt had pretty much wrecked our credit. We now realize that we actually pay more for some things because of bad credit, so we’re trying to correct it. I am under the impression that available credit is a factor in credit standing, so my thought was that the more we use it and pay it off completely in a timely manner, the better our rating gets and the more credit is offered.
None of that, however, answers the question as to whether this arbitrary hold time is kosher and why the issuer may be doing it at this point in time but not previously. We have done nothing different than what we’ve done over the last year.
Hitting your limit and causing a hold, on a regular basis, will give the credit card provider cause to suddenly increase your interest rate. Like a late payment or skipped payment will do. There is probably language in your no interest agreement for such things.
Look out or you may see your interest rate jumping up to 29% or so.
Credit cards, you are doing it wrong if you are using it so much. They are not a budget balancing tool. There is always a trap in the fine print and you are approaching it. Think about what a major interest rate increase will do to your spending habits. Then much of your payment will go to interest and nothing else.
Be afraid, very afraid, and just find another way.
Maxing out your card will generally tend to make an issuer nervous - it might be something someone in financial trouble might do before stopping making payments at all, for example.
I can’t figure out exactly what issues you’re having, but if you’re going paycheck to paycheck to pay down a credit card, you’re doing it wrong.
It’s highly unlikely they’re doing anything they’re not entitled to do in your (many pages of small print) agreement.
This is a good site for credit repair advice, it’s “tough love”, though - they will expect you to do your homework, and will (correctly) advise using cards very conservatively.
We aren’t paying interest because we aren’t charging anything we don’t plan to pay off at the end of the month. The interest rate for the card was ridiculously high from the get-go (30% APR). That’s why we don’t carry a balance. We also aren’t using it balance our budget, but to fix our credit. We never use it for anything we couldn’t afford to pay for without it. Are spending has not really increased since we got, but it has come in handy for timing purchases and payments. Also we are getting points that we intend to use toward our cell bill.
The only thing I noticed in the Cardmember Agreement is that they say we should keep our balance below the credit limit, which I take to mean don’t exceed the credit limit, but I guess that maxing it out periodically is probably not a great idea. I thought we were making the credit work for us by using it and paying it off and that was reflected in the improved credit score. I’m not sure I believe the credit score they are reporting because if it was “good” (according to their reporting on the app) why is our interest rate so high and why is the card on hold for four days after paying the bill in full? Clearly, there’s something going on but they won’t say what.
I’m about ready to just cancel this fiasco. I wasn’t for it to begin with but my spouse thought it would help. I can’t argue that it hasn’t but I’m not feeling all that comfortable with it at all. I’m thinking the best thing to do is to use it next week to pay our phone bill, cash in the points to pay towards the bill then pay off the balance and cut up the card. What happens if I don’t cancel it and I don’t use it?
Next step is to visit our credit union on Monday and see what they can do for us to continue repairing our credit. I just read that VantageScore is not as good as FICO, so maybe this has done actually nothing to our credit. Ugh.
Whoa. That’s very high. As in, massively subprime credit high. This would explain why they put the account on hold so quickly. The risk model for whatever credit product line you have is very conservative.
You don’t need to make purchases on a credit card at all for it to have a positive impact on credit history, and maxing it out all the time is a bad sign, both to the issuing bank and your credit history. Most banks report the credit limit and available credit of credit card accounts, and an ongoing history of 100% utilization looks bad.
I did not know that. What is an appropriate level of utilization that does demonstrate credit worthiness? I was under the impression that just having credit wasn’t enough to establish credit worthiness. It doesn’t make a lot of sense to me. Here’s some credit, we trust you but don’t use what we give you or it looks bad. It all seems like a scheme. I don’t think the credit industry exists to give us free money, so I don’t really trust them. I wish we didn’t even have to concern ourselves with it, but it looks like we’re going to need a car loan again in the near future.
because they use the logic that if you use all the credit and just make the min payment your pretty close to broke … just like your credit score going down every time you get a new card
What was advised ot me to get a good credit score is max a credit card take the entire amount and put it in a account and set it to autopay paying about 20 dollars over the min payment until its paid off because they look for consistency of payments and how long you’ve had the card ……
When you say “max” what do you mean? If your limit is $1000 are you hitting $1001.52 or are you hitting $999.90?? I dont believ for a second you’re hitting $1000.00 on the dot. If you go even a penny over your limit, you’re going to have problems. If you try to make a charge that would have put you over the limit had it not been declined, you’re going to run into problem. Stay under your limit, and dont attempt a charge that would put you over even a dollar.
That’s not good advice. The oppossite, in fact. Debt to Credit ratio is a big factor. By maxing a card and barely payibg it off, you’re keeping a huge debt to credit ratio. There is no need to carry a balance to be reported as paying on time/in good standing.
It sounds to me like you are putting an inordinate amount of emphasis on getting “points”. Perhaps if you backed off on your charging each month so you don’t hit the max (that’s never good), you might suffer slightly on points, but run less risk to damaging your credit. It ain’t gonna get fixed if you keep poking it.
Yeah, I’m puzzled by this too. if you go over your limit at all, that’s comprable to overdrawing your checking account. You’re trying to spend more money than you have access to. That’s a very bad thing, and the card issuer will penalize you for it. It sounds like they may have been giving you some slack in the earlier instances, but since you keep doing it they’re starting to crack down.it seems this is mainly a misunderstanding on your part of how credit cards work. Just don’t go over the limit and you should have no problem.
Based on what you have said, your best bet would be to go back to paying cash for everything, pay off the entire credit card balance, and to stop using the card but do not cancel it. In my experience, you can have an idle credit card for quite a long time before needing to worry about the issuer canceling an inactive account. Charging $10 on a small purchase one every six months or so will keep the card active. Pay off the $10 right away, carrying a balance does you no good.
Now, if your current card has an annual fee, my advice changes a little bit. If your credit score really is in the 700 range, you should be able to find and get a credit card with no annual fee. Get a no fee card, cancel the card with the fee, and charge $10 or so on occasion on the new card just to keep it active. The danger with this is that since you now have a better credit score, a new card will possibly have a higher credit limit that could be trouble for you if you can’t control your spending. It sounds like you do control your spending, but it is still a pitfall if you are not careful.
If your card has a $1000 credit limit, keep the balance below $100 at best, or below $300 at worst.
If you have the discipline and want to earn a little more in cash back bonuses, make more than one payment a month. Just make an early payment as soon as your balance creeps up.