credit card limit story

[fredo4]

If you pay off your card every month, they aren’t making any money off you. Pair that with the fact that you have a 50K balance on another card and they have an excuse to lower your limit.
Guido and I put everything we buy on our cash rewards cards and pay them off every month too. So we get cash back for our purchases and don’t pay a cent of interest. I’m sure our card companies would love to dump us or lower our limit too.

[jficquette]

[quote=davelj][quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]

I know. I got a friend who does the same stuff. He goes around getting these zero percent cards. I think he got 3 total. He takes the money out and puts in CD’s. By the time you pay all the hidden costs and taxes and encumber your credit its not worth it at all.

What makes evern nuttier with him is he has about $2m in cash and his daddy who is in his early 80’s has about $20m in cash and stuff.

John

[jficquette]

[quote=davelj][quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]

I know. I got a friend who does the same stuff. He goes around getting these zero percent cards. I think he got 3 total. He takes the money out and puts in CD’s. By the time you pay all the hidden costs and taxes and encumber your credit its not worth it at all.

What makes evern nuttier with him is he has about $2m in cash and his daddy who is in his early 80’s has about $20m in cash and stuff.

John

[jficquette]

[quote=davelj][quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]

I know. I got a friend who does the same stuff. He goes around getting these zero percent cards. I think he got 3 total. He takes the money out and puts in CD’s. By the time you pay all the hidden costs and taxes and encumber your credit its not worth it at all.

What makes evern nuttier with him is he has about $2m in cash and his daddy who is in his early 80’s has about $20m in cash and stuff.

John

[jficquette]

[quote=davelj][quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]

I know. I got a friend who does the same stuff. He goes around getting these zero percent cards. I think he got 3 total. He takes the money out and puts in CD’s. By the time you pay all the hidden costs and taxes and encumber your credit its not worth it at all.

What makes evern nuttier with him is he has about $2m in cash and his daddy who is in his early 80’s has about $20m in cash and stuff.

John

[jficquette]

[quote=davelj][quote=scaredycat]it’s just funny that their decision is so utterly irrational in terms of risk management. [/quote]

Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]

I know. I got a friend who does the same stuff. He goes around getting these zero percent cards. I think he got 3 total. He takes the money out and puts in CD’s. By the time you pay all the hidden costs and taxes and encumber your credit its not worth it at all.

What makes evern nuttier with him is he has about $2m in cash and his daddy who is in his early 80’s has about $20m in cash and stuff.

John

[peterb]

I think Meredith Whitney covered this a month or so back. Credit card companies are going to reduce thier overall limits in the next year or so by over $1T as an industry. They’re realizing their exposure to default risk is shooting up in this economic contraction.

[peterb]

I think Meredith Whitney covered this a month or so back. Credit card companies are going to reduce thier overall limits in the next year or so by over $1T as an industry. They’re realizing their exposure to default risk is shooting up in this economic contraction.

[peterb]

I think Meredith Whitney covered this a month or so back. Credit card companies are going to reduce thier overall limits in the next year or so by over $1T as an industry. They’re realizing their exposure to default risk is shooting up in this economic contraction.

[peterb]

I think Meredith Whitney covered this a month or so back. Credit card companies are going to reduce thier overall limits in the next year or so by over $1T as an industry. They’re realizing their exposure to default risk is shooting up in this economic contraction.

[peterb]

I think Meredith Whitney covered this a month or so back. Credit card companies are going to reduce thier overall limits in the next year or so by over $1T as an industry. They’re realizing their exposure to default risk is shooting up in this economic contraction.

[davelj]

[quote=AN][quote=davelj]
Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]
It’s not unusual at all to have the transaction fee waived when you open a new card. Citi, BofA, Capital One, etc does it. You’re thinking it’s a waste of time to make $900 for spending about 10 minutes opening a card? How rich are you? $900 for 10 minutes of “work” sounds like a great return for your time. Like the OP stated, the credit balance is only a small part of the whole puzzle. What if he has $100k in the bank and can easily pay of $50k immediately? How is that risky to offer him a $4k credit limit?[/quote]

For me personally, a waste of time. Yeah, $900 for ten minutes’ work seems nice. (Although it’s probably more like a couple of hours when you factor in interpreting the fine print, calling the credit card company to be sure you understand it properly, setting up an online payment, etc.) But it’s not worth the brain space of keeping track of it. I’ve gotten all the same offers and never even considered it. But if you’re scraping along and $75/month of after-tax money is meaningful to you, then by all means, knock yourself out.

Regarding risk, I wouldn’t offer anyone credit who engaged in these silly games. Spend your time improving the value of your human capital, not trying to game the credit card companies for a few hundred bucks. You’ll earn more in the long term and won’t have these problems. But that’s just me. To each their own.

[davelj]

[quote=AN][quote=davelj]
Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]
It’s not unusual at all to have the transaction fee waived when you open a new card. Citi, BofA, Capital One, etc does it. You’re thinking it’s a waste of time to make $900 for spending about 10 minutes opening a card? How rich are you? $900 for 10 minutes of “work” sounds like a great return for your time. Like the OP stated, the credit balance is only a small part of the whole puzzle. What if he has $100k in the bank and can easily pay of $50k immediately? How is that risky to offer him a $4k credit limit?[/quote]

For me personally, a waste of time. Yeah, $900 for ten minutes’ work seems nice. (Although it’s probably more like a couple of hours when you factor in interpreting the fine print, calling the credit card company to be sure you understand it properly, setting up an online payment, etc.) But it’s not worth the brain space of keeping track of it. I’ve gotten all the same offers and never even considered it. But if you’re scraping along and $75/month of after-tax money is meaningful to you, then by all means, knock yourself out.

Regarding risk, I wouldn’t offer anyone credit who engaged in these silly games. Spend your time improving the value of your human capital, not trying to game the credit card companies for a few hundred bucks. You’ll earn more in the long term and won’t have these problems. But that’s just me. To each their own.

[davelj]

[quote=AN][quote=davelj]
Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]
It’s not unusual at all to have the transaction fee waived when you open a new card. Citi, BofA, Capital One, etc does it. You’re thinking it’s a waste of time to make $900 for spending about 10 minutes opening a card? How rich are you? $900 for 10 minutes of “work” sounds like a great return for your time. Like the OP stated, the credit balance is only a small part of the whole puzzle. What if he has $100k in the bank and can easily pay of $50k immediately? How is that risky to offer him a $4k credit limit?[/quote]

For me personally, a waste of time. Yeah, $900 for ten minutes’ work seems nice. (Although it’s probably more like a couple of hours when you factor in interpreting the fine print, calling the credit card company to be sure you understand it properly, setting up an online payment, etc.) But it’s not worth the brain space of keeping track of it. I’ve gotten all the same offers and never even considered it. But if you’re scraping along and $75/month of after-tax money is meaningful to you, then by all means, knock yourself out.

Regarding risk, I wouldn’t offer anyone credit who engaged in these silly games. Spend your time improving the value of your human capital, not trying to game the credit card companies for a few hundred bucks. You’ll earn more in the long term and won’t have these problems. But that’s just me. To each their own.

[davelj]

[quote=AN][quote=davelj]
Actually, this is one of the MORE rational decisions I’ve seen by a financial institution in the recent insanity. Pay off the $50K and I bet you’ll see your credit limit on the Barnes & Noble card increase. This is the price you pay for financial gamesmanship. 2.5% on $50K is $1,250 pre-tax. After tax, probably $900 or so. And you’re having to pay down the balance with a minimum payment, so you’re not getting the full $900 in the first place. And we’re assuming you didn’t have to pay a 3% transaction fee to get the $50K, which is highly unusual. All in all seems like waste of time given the hassle involved and the pittance of a return. I mean, why bother? I don’t get it.[/quote]
It’s not unusual at all to have the transaction fee waived when you open a new card. Citi, BofA, Capital One, etc does it. You’re thinking it’s a waste of time to make $900 for spending about 10 minutes opening a card? How rich are you? $900 for 10 minutes of “work” sounds like a great return for your time. Like the OP stated, the credit balance is only a small part of the whole puzzle. What if he has $100k in the bank and can easily pay of $50k immediately? How is that risky to offer him a $4k credit limit?[/quote]

For me personally, a waste of time. Yeah, $900 for ten minutes’ work seems nice. (Although it’s probably more like a couple of hours when you factor in interpreting the fine print, calling the credit card company to be sure you understand it properly, setting up an online payment, etc.) But it’s not worth the brain space of keeping track of it. I’ve gotten all the same offers and never even considered it. But if you’re scraping along and $75/month of after-tax money is meaningful to you, then by all means, knock yourself out.

Regarding risk, I wouldn’t offer anyone credit who engaged in these silly games. Spend your time improving the value of your human capital, not trying to game the credit card companies for a few hundred bucks. You’ll earn more in the long term and won’t have these problems. But that’s just me. To each their own.

[Author]

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