Wow food for thought......so maybe you guys can answer this one.... I just got a john deere revolving account for some landscaping and I thought when I asked for the 6.9% 48 mo option it would report as an installment loan. I asked them and they said no it still is revolving. This stinks because I was going to use the entire limit towards the project which costs more. Which companies (mbna, citi, chase, etc.) will jack my rates on THEIR card if I went over 50% with john deere.......any? Or do they only care what I do on their card? Help!! This is disappointing to say the least.
Re: Re: Bank1/1st USA & Wachovia/MBNA "People should know that MBNA is notorious for raising rates once utilization on their card goes above 50%, so be careful with them. If you choose to carry a balance on their card, have at least one other card with a comparable balance to which you can transfer if MBNA does jack you. Concerning the logic behind raising rates on highly utilized cards, I think that such an action is not one of "risk protection" but one of greed on the part of the CC companies, and something that they should not do. What is increasingly more difficult to pay back, $5,000 at 7.9% or $5,000 at 21.9%? While raising rates benefits the company in the short term re generation of missed payment and overlimit fees, doing so in the long run increases the chance that the company will not make back what it lent (if that person defaults and stops paying altogether)." From my point of view, it seems like MBNA did not do a very good job of explaining it to you. And I'm sure they don't want to get too specific. But if they raise your APR because you're not paying it down, it's going to do 1 of 2 things: 1. Get you to continue revolving it for longer, generating more interest income; 2. Get you to pay it off, which they ultimately want you to do anyway. It is a loan. If you're carrying a high balance for a long time, you're demonstrating the same trends that someone does before they either charge off or file for bankruptcy. You are a risk. They want you to pay it off, whether it's a balance transfer or home equity or straight cash. And increasing APRs on risky customers will get this done. It's smart business. Other companies raise APRs due to one or two late payments. Come on. That is not a good assessment of risk. Everyone is late. Some people are just sloppy. Or live far away. Or their secretary forgets. It happens. It doesn't make you a risky customer. Notice that you do not become risky on your credit report until you've hit 30 days. Yet these companies are deeming you risky at 1. Plus, they'll typically give you just 20 days to get your payment back in after the statement closes. 7 days to get to you and 7 days to get back, that leaves you with 6 days to write out the check and send it back. Pretty good chance of falling a day or two past due. The biggest factor most don't know about on their FICO score is utilization. If you're highly utilized, you're a higher risk and more likely to get declined on an application. I know that in MBNA's case, they will always notify you 2 statements ahead of time with the opportunity to call in and speak with an account review analyst, who will go over some financial info with you, potentially pull your credit report (soft inquiry), and give you some options. They are the most fair company out there in terms of increasing APRs. You may not like it, but every company does it. Just because other companies haven't done it to you, doesn't mean they won't ever. And they'll do it a lot more sneakily than MBNA. MBNA was just recently named as one of the very few subprime lenders in the industry. Providian and Capital One were the two biggest out of the major banks. Capital One has to set aside close to, if not all of, their 2003 profits as a reserve for their subprime portfolio. Companies like MBNA and Citibank do not because they lend to the more prime customers. Also, MBNA will give you the option to reject your higher APR and continue paying it down as you have been without using the card. For a lot of people, this is a great option to continue paying at the lower APR without the temptation of continuing to use it. Because some people get themselves into trouble and before they know it they can't afford the minimum payment. A lot of you may think at this point that I work for MBNA, but I am just an advocate for companies that do business the right way and MBNA, Citibank, and Discover are the 3 that stick out to me as being the best. And I've been doing this for a long time. I know the ins and outs of the industry and what each company does. CA
Re: Re: Re: Bank1/1st USA & Wachovia/MBNA I should clarify that MBNA has done nothing to me adversely. I have not revolved a balance since I have opened the account. This is greed. Particularly for people who only have an MBNA card and no where else to go. Again, it's smart business *only* if that customer has another card or loan source to transfer the balance to. Most Americans do not. And with the way MBNA raises credit limits (often surpassing standard income limitations that Citi, Chase and other issuers have) and literally begs people to use the credit, it's dumb business to increase the probability of default by increasing the interest rate ONLY because the person is above 50% utilization on that card. I disagree. I find MBNA useful only for helping people with utilization ratios, provided that they don't actually use the card. Traditionally, based on posts on this board, MBNA is VERY hard to work with once a person goes delinquent. I find Citibank by far to be the most communicative, ethical and consistent issuer. But in MBNA's defense, they do all applications as manual reviews, which is a breath of fresh air in this FICO dependent world.
Re: Re: Re: Bank1/1st USA & Wachovia/MBNA If you're highly utilized, you're a higher risk and more likely to get declined on an application CrdtAnlys ============== No;You are an eligible sucker to be reamed. The END ************************* LB 59
Re: Re: Re: Bank1/1st USA & Wachovia/MBNA Concerning the logic behind raising rates on highly utilized cards, I think that such an action is not one of "risk protection" but one of greed on the part of the CC companies CrdtAnlyst ======== Exactly right: It's yet another fastisy of scoring and reporting. ************************* LB 59
Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA No issuer has 50% as a guideline. The guideline is if your balance has stayed the same or increased over a 9 month period, you're potentially risky. They send you the letter about the rate, ask you to call in, review your account and the Account Review Analyst deems you risky or not. It's very efficient. Citibank and Discover do this as well. Discover does it the same way. Citibank does not send you the letter with the chance to reject because it's considered a "default" rate in their terms and it will automatically go up.
Re: utilization CA - I appreciate your commentary very much. It makes a little more sense to me now whey they do it. My scenario that I was hoping for some comments from this wealth of knowledge board was: I am going to have a John Deere Account that will originally be charged over 50% but will be steadily paid down this year, and hopefully paid off by then. I have several other revolving accounts that I pay off pretty much every month. (I'm not sure what "revolve a balance" means, unless it means carry a balance marci) John Deere says that they do not raise rates if I am over 50% because the contract was for an entire job. (They report it revolving because I can charge more as I pay it down.) They said they could not imagine another company raising my APR on Visa or MC because my JD acct was highly utilized. Bottom line is : Will companies like MBNA or Bank One or Citi raise my Visa Apr because ANother (not their card) account is over 50% for part of this year?? I pretty much figure it will affect my score. PS Am I correct in thinking that the balances reported to the bureaus are the balance on the date your statement cycles? So the trick is just to make sure you pay your account in full, online, on or before your due date so when it cycles.....ta da! $0 balances!! I don't care if I have to juggle money, I do not want to carry balances!
Sheep You were mentioning 6 mos of a good track record and they'll consider you for another product......what about the business card? Still wait 6 mos?
Re: Sheep The 6 months comment was based on my personal experience. Your mileage may vary. My CRs lacked sufficient history so I didn't have the nerve to apply for more than 1 card. After a few months of proving that I was "real," I applied for the second card. It's interesting to note that the second card had its own CL...in other words, they didn't carve out a chunk from my 1st card and re-distribute the CL pie. I've never applied for a business card with any company because of the concern that they'd want me to open my robe a bit too much. I've got my modesty to consider, you know.
Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA I don't know what the exact guideline is but it is somewhere over 50% utilization. And this has not happened to people who only maintain consistently high balances. It's happened to some who wanted to take advantage of a rock bottom interest rate, and borrowed up to the limit to put that cash into a MF. Even though these people were paying the balance down, they've gotten jacked, too. I guess my point is if you don't want people to use a certain credit line, why grant it to them? And the answer to that, I maintain, is greed.
Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA Who says Wachovia = MBNA ?? Not true, not true at all. The are totally separate entities. Wachovia and FIRST UNION merged.. MBNA isn't even in the picture !
Re: Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA Lady - we're not discussing banking affiliations, but rather if you apply for a Wachovia cc it's handled by MBNA.
I guess my point is if you don't want people to use a certain credit line, why grant it to them? And the answer to that, I maintain, is greed. marci | ============ None other than that.
Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA I guess my point is if you don't want people to use a certain credit line, why grant it to them? And the answer to that, I maintain, is greed. marci | ============ None other than that.
Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA I guess my point is if you don't want people to use a certain credit line, why grant it to them? And the answer to that, I maintain, is greed. marci | ============ None other than that.
Re: Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA The Wachovia credit card program is issued and administered by MBNA America Bank, National Association. MBNA and MBNA America are service marks of MBNA America Bank, National Association. Equal Credit Opportunity Lender Member FDIC First Union is a registered trademark of Wachovia Corporation.
Re: Re: utilization Issuers will only increase your APR due to utilization if it is a problem on their card as well. And yes, your balance that reports to the credit bureau the balance on your statement closing date. In my opinion, if you pay in full each month, you want to show that balance at the end of each month because it helps your FICO.
Re: Re: Re: Re: Re: Re: Bank1/1st USA & Wachovia/MBNA Marci, these issuers have strategies in place for such things. If you're carrying your balance at a 0% or close to that APR for say 9-12 months, that would be in the balance transfer category on your statement. Different from cash advances and purchases. Your rate will not be raised in this case (typically). If you continue to carry it once the promo expires and you're still making just minimum payments for a while, then that shows financial stress and will potentially cause your APR to go up. Providian on the other hand, has a stipulation in their terms that if they see any "minimum payment activity," your APR will go up to 29.99. What is minimum payment activity? 1 payment? 2 in 6 months? They don't specify. But if you make a $6k payment, then pay the minimum, then pay $6k, then minimum, would your APR go up even though you've paid down $12k? That's not risky behavior. That doesn't make any sense. But if your balance stays at $15k (for example) for 9-12 months without dropping, that becomes a concern. And to answer the second question, these companies are in the business of lending money. They give you a limit for a reason. They want you to use it. But they don't want to be funding a loan for a long, long time because that, again, is the trend people take before charging off or filing for bankruptcy. The biggest issuers, Citi and MBNA know this and this is why they've added these strategies. They don't do it out of greed and they don't do it for nothing. They don't do anything before a lot of research is done. And to answer a later question, MBNA services First Union's accounts. They also service Wachovia's new accounts as well as the better part of the portfolio that Wachovia had. Bank One (First USA) took the rest of the portfolio.
Re: utilization Ca....I want to show the balance at zero? or I want to show A balance to improve my fico? You're pretty sure then that carrying well over 50% on my John Deere revolving shouldn't affect me with chase or mbna or bank one? You've talked a lot about who you think are good and fair companies....what about for business cards, who would you recommend?
