Same comment from US Bank, see my AOR thread.

zapy said:Citi can go screw themselves. They did me good. I had 22K on one card with them and 4K on another - both 0% for life cards. After I co-signed on a college tuition loan for my daughter (supplied by Citi) they did account reviews on my two accounts. Their decision? I was now a bad credit risk. They upped my 0% to 3o somethin percent interest and payments went from $212 to $700 on the card with the large balance. I could NOT afford that but tried. Was late a time or two and then other cards followed suit. Forward to today: ~~~~~> Citi is ready to sue me for payment unless I pay then 5K down and $750 a month on one card. I have since lost a large portion of income. I have not paid anyone other than necessities for the past 6 months or more. BK is looming.......

Apparently you are actually a credit risk.

Citi reduced CL on all my 5 cards to little over the balace on them. Four of them were AOR cards.Reason given - too much outstanding credit card debt.

cafe said:After reading over the entire thread I decide to close 2 out of 5 cards I have with citi and not start my next mini AOR until all the 0% BT balances (around 18K)are paid off. Thanks OP and everyone for the information!

Please keep us updated

Stated in my own tread, citi closed 6 cards. I had 4 personal with Citi all closed 1 with Associated bank closed and 1 Citi biz closed 35K in AOR money still at 0% and they gave me all my TYN points lol. I dont care clsoe all my accounts. The thing that i dont like is they started creating seperate "payoff" account numbers and all them are showing up on my credit report Equifax??Can i dispute them as duplicates???

No problems with Citi here. I bumped my main personal card up to $25k a few weeks back, and just got approved for 2 new biz cards for another AOR.

makeinu said:The CC issuers like high utilization. Period....They make money when you borrow and pay back, whether it be on interest, merchant fees, or just increasing the likelihood of the former two.

This is a very interesting perspective, and it makes a hell of a lot of sense.

So the answer is very simple: the fewer payments you make, the less likely you are to make payments in the future. Think about it, how would you feel, for example, if you lent a friend money for a year interest free asking only that he pay the entire balance by years end? Would you be nervous on day one, obviously not; if you were then you wouldn't have lent the money on day zero. And if your friend paid you off in total on day three then you'd most likely be happy to start the process all over and lend to him again on day four. After all, the proof is in the pudding, so it doesn't matter what kind of income your friend has as long as he has the ability to pay you back and nothing demonstrates the ability to pay as well as actually paying. However, if by the time day 364 comes around your friend has not paid you anything beyond the bare minimum then you would clearly start to worry that perhaps he is never going to pay you back at all. Even if he keeps his promise and comes through on day 365 you'd probably think that he had to rob his grandmother and you probably would not want to lend him the money again.


I'm with you here. It seems like you're advocating treating revolving debt like fixed debt (e.g., a car loan), and that you should make 12 equal payments on a 1 year BT deal. This could have some merit, but then you say this:


And so it is, naturally, with the credit card issuers. I have been at nearly 100% utilization for the last couple of years now and have not experienced any adverse action from them since. I believe the reason why is because I MAKE PAYMENTS which show on my credit report. I don't borrow $100k and seemingly teeter on the edge for a year before paying back. When I borrow $100k I pay it back within a statement or two. Some months my credit reports show available credit way over my income and other months they show debt way over my income, but the issuers do not bat an eye because, most importantly, my credit reports show corresponding regular payments. The issuers can clearly see that my ability to pay is consummate with my ability to borrow and income has nothing to do with it.

What you're describe looks like an up and down yo yo of credit usage. I'm not sure why this would be perceived as a healthier sign to your lenders than the typical AOR approach of 1) big pile of debt, 2) slowly pay down over 12 months, 3) no debt at all. Why not do as you suggested in your "borrow from a friend" analogy and pay your BTs off in equal payments? (One benefit would be not having to pay BT fees on the same offer every couple of months or having to rotate your BT positions so often.) Personally, my new strategy is to show about the same (overall) level of debt throughout the year - a nice byproduct of the rolling thunder approach vs. the AOR approach. Perhaps I'm missing something in your strategy, and I'd love to hear some more details.


Now the flip side of the coin is deposit accounts. Banks profit on deposit accounts when you don't use them (ie when you stick the money in and forget about it). You'll never get adverse action from a HYS account for leaving your AOR money in there for 12 months. You will, however, get adverse action for depositing/withdrawing tens of thousands of dollars on a monthly basis. It happens to me all the time. For example, I just recently had an outgoing wire transfer request on fully cleared and collected funds refused and had to use an ACH pull instead (you see, the bank could not legally deny the ACH pull on cleared funds, but they are not obligated to offer me wire transfer service).

So while I, a very high utilization customer, never get adverse action on my credit accounts, I REGULARLY get adverse action on my deposit accounts. Penfed, for example, is very happy to lend me tons of money, but does not seem to want my deposits.

You can contrast this with a few years back when I experienced severe adverse action from following the conventional FW wisdom of borrowing and holding at below 50% my credit limits. Nope, the issuers do not just want borrowers, they want USERS.

The trick to appease both sides and avoid all adverse action is to have enough of your own capital so that you can effect large percentage-wise variations in activity on the borrowing front, without also having large percentage-wise variations in activity on the deposit front. I believe the reason those of you with very high income experience less adverse action is because you are able to accomplish this. The fact that the banks know you have the income is secondary. Of course, the perverse fact of life in this case is that the higher your income the less percentage-wise reward you can get from such arbitrage.

I think your reasoning about deposit account usage is dead on, but you might want to consider decoupling your heavy card activity from your heavy deposit activity. For example, I use Fidelity as a hub for moving large sums of money. They don't seem to care, but they also don't have any of my credit accounts. There's no way I would treat my BofA deposit accounts in the same way - BofA is too important of a credit shop to get them upset with questionable deposit activities. By the same token - and here's where I disagree with SIS - I think it's a good sign to have deposits on hand with your most important lenders. (He would say this is a bad idea. I'll find a link later if anyone's interested.) This is one of the only ways for Citi to know how rich Dolmar is, for example. The key is not to use these accounts as a hub for moving large amounts of money to and from other institutions. Make these accounts fairly stable.

good discussion...let's keep it going.

Very interesting post makeinu. Thanks for taking the time to lay it out. A few responses/remarks:

makeinu said: However, you have to understand that just borrowing money is not utilization. Utilization is the round trip process of borrowing and paying back. You seem to be using a non-standard conception of "utilization" here. Standard usage in the credit context refers to how much of the credit line(s) are drawn at any particular time. Hence utilization does NOT refer to the "round trip process of borrowing and paying back". Depending on the context, one might refer to "absolute" utilization in dollar amounts (e.g. $10K utilization), or "relative" utilization WRT the line size (e.g. 40% utilization if the line size is $25K.) Generally credit scoring entities like FICO specifically refer to the latter, relative calculation. Here's the first example a google search on "credit utilization" turned up, straight from Equifax : Credit utilization is defined as total remaining revolving credit debt (e.g. credit cards) divided by total credit debt as a percentage. Note that both these notions are different from "reported utilization", which refers to the debt levels that are reported to a consumer or business credit reporting agency, and can diverge widely from the borrower's true utilization at any particular time.

What makeinu is referring to might be described as "charge volume", so I'll use that term going forward. So if I charge my entire AND pay it back twice in thirty days--leaving me with a $0 balance--my "utilization" sits at zero, but my "charge volume" has been very, very large.The CC issuers like high utilization. Period. Utilization makes them money; If it didn't then they wouldn't be in the CC business. So the more utilization the better. If we mean "utilization" in the standard sense I just defined, this statement is mostly incorrect. First, creditors don't make money on utilization per se. Second, they believe (correctly) that there are high correlations between borrowers with high utilizations and those who don't pay back their debts. Third--related to, but distinct from the second point--the credit scoring agencies, on whom creditors rely heavily, always have sharply penalized high utilization.

Now, if we substitute "charge volume" for "utilization", then makeinu's point hits much closer to the mark. Provided it's done on standard, non-promotional terms, charge volume is indeed very profitable for the card issuer. But even there, creditors worry that extremely high charge volume is a high risk factor for fraud or other issues. This explains the many reports here and elsewhere of adverse action following on the heels of massive charge volume.
So the answer is very simple: the fewer payments you make, the less likely you are to make payments in the future.This is also close to the mark. I would simply replace "fewer" payments with "fewer and smaller". I have been at nearly 100% utilization for the last couple of years now and have not experienced any adverse action from them since. I believe the reason why is because I MAKE PAYMENTS which show on my credit report. I don't borrow $100k and seemingly teeter on the edge for a year before paying back. When I borrow $100k I pay it back within a statement or two. Some months my credit reports show available credit way over my income and other months they show debt way over my income, but the issuers do not bat an eye because, most importantly, my credit reports show corresponding regular payments. The issuers can clearly see that my ability to pay is consummate with my ability to borrow and income has nothing to do with it.There's a lot to unpack in those few sentences. First, if you "pay it back within a statement or two", that means that you're making LARGE and FREQUENT payments. And I emphatically agree that if you do this consistently, card issuers will generally have no problem with it and even thank you for it. Second, it would be more helpful to get more details on precisely what you mean by "utilization" here, as well as what your "credit reports show". If they really do often show you as being almost "maxed out" across all your lines, then you have been fortunate indeed to avoid AA, notwithstanding your large payments. Third, what do you mean by your credit reports showing "corresponding regular payments"? Most reports do not show payments at all...perhaps you mean something else?

Now the flip side of the coin is deposit accounts. Banks profit on deposit accounts when you don't use them (ie when you stick the money in and forget about it). You'll never get adverse action from a HYS account for leaving your AOR money in there for 12 months. You will, however, get adverse action for depositing/withdrawing tens of thousands of dollars on a monthly basis. It happens to me all the time. For example, I just recently had an outgoing wire transfer request on fully cleared and collected funds refused and had to use an ACH pull instead (you see, the bank could not legally deny the ACH pull on cleared funds, but they are not obligated to offer me wire transfer service).Excellent points all.

So while I, a very high utilization customer, never get adverse action on my credit accounts, I REGULARLY get adverse action on my deposit accounts. Penfed, for example, is very happy to lend me tons of money, but does not seem to want my deposits.

You can contrast this with a few years back when I experienced severe adverse action from following the conventional FW wisdom of borrowing and holding at below 50% my credit limits. Nope, the issuers do not just want borrowers, they want USERS.VERY interesting. Precise details would be very helpful here, particularly on the credit AA you experienced. There are very few reports of anyone who kept each one of their individual lines below 50% getting AA, and when they do, it's often because they did a massive AOR (many inquries and many new lines), or otherwise did something to invoke the wrath of credit issuers. Note I'm not saying you're wrong on the facts here--I've known you for years to be a highly credible source. I just question whether the inferences you're drawing from those experiences are warranted.

The trick to appease both sides and avoid all adverse action is to have enough of your own capital so that you can effect large percentage-wise variations in activity on the borrowing front, without also having large percentage-wise variations in activity on the deposit front.Again, a lot to unpack there. First, it assumes an issuer will be aware of variations in your deposit accounts. Even if you deposit and borrow at only one place, your issuer won't know that, so won't be able to infer much. Second, large variations in activity are themselves a high-risk factor. This doesn't mean your point is without merit though. If you do larger charge volume than usual with an issuer while leaving untouched the large deposit balance you have there, you'll almost certainly leave that bank resting easier.
aeiouy said:Unused credit lines are a huge risk for the banks, and an unnecessary one. If I extend someone 100k in credit and they never use it, then I make NO money off of them. Yet if one day their life turns upside down and they run up 100k in credit which they are unable to pay, I am stuck. It is all risk and no reward.

I do not agree with your line of thought here. By extending you 100k of credit you could either use it to the bank's benefit or to their detriment any day. The risk/reward does not change after having the credit available for years and years. If your life takes a sour turn you could just as well suddenly become a profitable customer, paying interest every month and clearing out the balance every few months.

There is plenty potential for reward and your false reasoning could just as easily be applied in the opposite way by saying that if someone never uses their $100k of credit then you lost NO money off of them, yet they could suddenly decide to fall into the CC trap and turn into a cash cow ("all reward and no risk", by your reasoning). The reality is that there is both risk and reward.Here your answer makes sense in theory, but doesn't hold true as a matter of empirical practice. Consider: how often is someone in trouble likely to go from little-to-no charge volume to huge utilization, only then to pay it all off a few months later? No doubt it does happen. But while I don't have proof of this, I'm certain the far more likely scenario is that the person who charges much more than usual gets in over their head, leaves the issuer holding the bag. This is why aeiouy's point has merit.

lhendricks92 said:Don't forget banks are also hoping to capture significant interest revenue on those high balances, even the ones at a promotional rate.Naturally. But they don't generally make money on promotional charge volume. So, citi loses plenty on their 5% promotional period on the CashReturns card (that's why it died), and an issuer offering a capped-fee 0% offer will lose plenty during the promo period unless the borrower messes it up. their (generally prudent) bet is that enough promo users will remain "revolvers" or "heavy chargers" such that they'll make the money back and then some. BUT once they have data suggesting that you aren't one of those borrowers--and once their systems are sophisticated enough to track this data--you can expect to be invited to fewer promotional parties. So, from that perspective, banks do like high utilization. No, that's still about charge volume, not utilization (see above). If charge volume is high but utilization low, then banks get the merchant fees/interest revenue without the same worry that you'll default on the debt. But, there are "micro" and "macro" forces which may make them dubious of your ability to repay. First, they may take exception to your individual activities (e.g., your debt levels with other lenders, recent applications, etc.) Second, the general deterioration of the economy and/or health of the lenders can make them more jittery than normal. The current status of the latter (macro) makes the former (micro) even more crucial to surviving (and thriving) in the credit game.Yes. And "utilization" , much more than charge volume, is what you've called a "micro" factor that makes them nervous.

DaveHanson said:BUT once they have data suggesting that you aren't one of those borrowers--and once their systems are sophisticated enough to track this data--you can expect to be invited to fewer promotional parties.

Ah, now THIS is what we should be discussing. What strategies do you use to keep getting offers? For example, would you suggest paying a bit of interest at the end of a 0% offer?I wish I knew reliable ways to "tease" promotions out of the issuers. I don't think paying a little interest now and then is a bad idea, though I haven't tried it myself.

Unlike many here who call to get fees waived, I do tend to not sweat paying annual fees on cards that make me lots of money. If I get docked $30 (Starwood) or $75 (Premier Pass Business) once a year on cards that make me many thousands, it's money well spent. The chance that it avoids getting my file tagged with an "unprofitable cheapskate" mark is worth it in such cases.