It’s understandable to be annoyed at a refusal to explain why the card is basically shut down. However if score is mid 700’s why not just get another one? And since as you say you got it prior to a big improvement in credit score, and given the interest rate, it’s probably a card for people with very weak credit where you’d expect the card company to be on more of a hair trigger for signs the customer was going to stop paying, like maxing it out constantly. And keeping in mind, though maybe too obvious to say, this is all done by computer so you really should not take it personally.
Nor really ‘predatory’ in any way I can see, just annoying, I get the annoyance. They are in business to make money, which is mainly from having people use the lending feature. I’m actually surprised more cards don’t try to weed out people who always pay in full at the end of the statement period (as we always do, and a high % of self selected audience on credit card threads on the internet do, but most regular people don’t do, or not always anyway). Then besides that they make money by avoiding delinquencies, a significant number of people don’t pay compared to even interest rates like 20% or more. Again in layman’s common sense terms one might judge that somebody paying in full each month is not a pending delinquency even if they max the card a lot. But maybe their algorithm is different because their actual experience is different. This is what they do for a living.
Back to paying in full, I’m personally reluctant to get up on my high social justice horse about credit card co’s practices at least as they pertain to me because I take advantage of them. I seek out the best cash back deals and never pay them interest or annual fees. I know the cost of merchant fees to CC co’s are embedded in store prices but they would be whether I used CC or not, so that doesn’t logically enter into the decision to use them (of course if somebody offers a discount for cash > CC cash back, I pay cash). As far as how I use what they offer, they should be complaining about me.
Are you paying your cellphone on time every month? Do you have utilities (electricity, natural gas, water, etc.) that you pay on time and in full each month?
I ask because Experian has this new “Boost” thing that is free. According to an article I read, they add your history with cellphone and utility payments to your credit profile so (assuming, I guess, that your record of payment on those is good) you get an immediate boost to your credit score.
I know nothing more about it, but it may be something for you to look into.
I agree with Dag Otto here: go out and get another credit card. With a score in the 700’s and recent payment history, tha should be quite possible. Even with a fairly low limit (like $1000) your credit record will show a total credit available of $2000, so if you continue to charge about $1000 a month, you credit utilization is now down from 100% to 50% – much better.
Also, when one credit card company puts a hold because you’ve reached the limit, you can charge it on the other card. (But reaching the limit ought to be a warning to you to stop your spending that month. That is the big risk here – you now have 2 cards, with $1000 limits on each. You need to resist the temptation to spend more. Always paying the full balance each month is a good way to do that. Keep it up!)
Using one card in even months and the other in odd months will keep both active & in good standing. Just keep paying each one off each month.
Why not make more than one payment to the credit card per month? Why not make one every day? Many of the businesses I help work on the books for do this because they spend much more in a month than their credit limit, and they too are all-in on credit card points. Ok, maybe one every day is overkill, but it’s also what was suggested to the class in a HS Economics class - when you first get credit, use it, but always pay it off immediately. The main reason for this is that it keeps you using your credit card and showing that you can borrow money and pay it back, but also shows that you don’t need to frequently use a large percentage of your available credit, which makes you more credit-worthy as it shows you are able to maintain a reserve to draw on if you hit bumpy patches and can’t pay everything off on time. As many people have said, hitting the limit constantly is not good and presents you as a bad credit risk, late payments or not.
I think you’re obsessing too much on this factor. There’s always some delay in the money actually being transferred and credited to your account. With this all happening on a Thursday/Friday, it’s no surprise that a longer delay than usual (for whatever reason) might push it into the weekend, and any further changes would probably get pushed to the following business day, Monday.
Are these holds automatic? And are they released automatically? If there’s a real person in the loop anywhere, weekends can really screw things up. The person answering calls at their call center might not have complete access to the file in order to explain exactly why there’s a problem.
This is a common misconception and it’s unfortunate it’s still taught. It’s probably a holdover from when a person might only have credit with a single bank who individually reviews accounts. It seems intuitively correct, but it’s not how credit decisions are made. Banks don’t report daily transaction activity to the credit bureaus, just the credit limit and utilization at the end of each cycle. Someone who charges $1000 and pays it immediately looks the same as someone who went through their cycle with a balance of $0; their respective banks will report 0% utilization. Payment history and total debt-to-income ratio are the main factors that affect creditworthiness and have an even more outsize effect on someone who is building or repairing credit than other factors like age of accounts and account diversity.
I question this statement. IANAFinance guru, but I pay all credit cards immediately, that is, shortly after receiving the monthly statement and prior to the due date. By your claim, this should result in a zero balance on my credit report. But all of my credit reports that I have viewed in the past year show a non-zero balance for some cards, typically a few hundred dollars. And no delinquent payments are listed.
I suggest that the credit reporting data is submitted sometime in mid-cycle. If you were to look at my credit balance for any card at any random time, it would probably show a few hundred dollars owed, even though I had not yet received a bill or made a payment.
The cycle I referred to is the bank’s reporting cycle, whenever that might occur. I specifically avoided referring to defined months and when I said “Someone who charges $1000 and pays it immediately” I meant immediately, as suggested by glowacks, who I was responding to.
Ah, you are probably right about this. My husband has been managing he account and all I know is that he was “maxing it” a few times. It sounds like the best advice, which we have decided to follow, is not to utilize the credit at 100% or even anywhere near it.
We decided that we would only use the card to pay off the cell phone bill (which earns us the most points) and then pay it off with the next pay cycle which will occur well be the due date or even the bill being issued. That way, we only utilize a little over 30% of the credit limit and carry a balance for no more than two weeks during the month. There will never be any risk that we can’t pay it because it is a normally occurring bill which we’ve never been late on and it earns points that we can also apply to that same bill, slightly lowering the cost of that service. Since there is no annual fee and we will never pay interest or late fees, it should work out better and I won’t have to worry about holds on the card.
Thanks for all the advice and education. In any case, in the past year as a result of this card the issuer is reporting that the Vantage 3.0 credit score has improved by about 150 points, so that’s a good thing and something to take to the bank!
It did get fixed, but maybe not to the extent that it could have improved if we hadn’t been “poking at it” so much by over-utilizing our credit limit. Yeah, I admit we figured maximizing the points were a way we could lower our monthly bills because they don’t give you a lot, but on our budget every dollar counts. But those savings could quickly become nullified by one late payment, so we were putting ourselves at risk by maxing it out to the extent that we spent the majority of a pay cycle paying it off. In hindsight that really could have blown up in our faces.
Thought I’d post an update since I have so much time on my hands now.
A month after my last post, we bought a car financing a little under $15,000 at 4.14% APR with payments under $300. For the last year we’ve been making additional extra payments on the principal each month. We stopped using the cellular credit card as aggressively and the holds ceased. We were using it to pay our cell bill and then using the rewards to pay down the next cell bill basically just to get a discount on our cellular account.
This year they decided to discontinue the card and have suspended it, but last fall we were approved for a Capital One Visa with a slightly higher line of credit but no interest introductory. We have been careful to keep our utilization low and pay it off monthly. The credit score had gone slightly down, but then recovered. Just last month (sigh*timing…) we got an Amazon prime rewards card and used the $70 gift card immediately. This card has a credit line almost double that of the now closed cellular card. It looks like we might take a little bit of a hit on the credit score because the we only had the card for a little over a year before they closed it. But hopefully the new card recovers it. At this time, we have no plans to take on any additional debt and are focused on keeping our heads above water during the pandemic and socking whatever we can into the savings account. Fortunately one of us is still working for the time being and I expect to be furloughed in a week. Thankful for the CARE Act to keep us afloat for at least a little bit. We’re nervous but caught a lucky break on our taxes, so we’re well positioned to come out of this (with the expectation fingers crossed that my job survives and I’m back to work by summer).
Thanks for all advice. It really helped because in hindsight I can see I had very little understanding of how credit really worked. Hope we’re making better choices now.
Thanks for updating us! I’d also like to thank the Dopers who kindly gave detailed explanations.
Credit scores always seem like voodoo to me. (Ex. when I made a big payment to my c.c. my score went down so being financially is … irresponsible?) Thank you all for clearing up a bit of it for us less-educated fools.
