[fdye]

Agree this is a UX problem. They need an option, "Pay minimum + X amount each month" so a user could set it to be $25 for their min + $50 to pay down a bit of the balance. This is actually the prescribed way most places recommend to repair or keep a high credit score. If you pay it entirely off you get dinged, if you just pay minimums you get dinged.

[redblacktree]

How do you get dinged for paying it off entirely? I pay all my credit cards in their entirety each month, and it has not seemed to ding my credit score.

[inetknght]

As I understand it, your credit score isn't dinged per-se, but it doesn't increase as much as it would if you carried a balance.

Remember that credit scores try to score your credit worthiness: are you capable of paying off a balance. How can that be measured if you never have a balance? Instead it simply appears that you have a lot of available credit without ever using it.

[kccqzy]

You are incredibly confused about terminology here.

You have a balance. And then you let Autopay pay it off in full by the due date, which is after the balance appears on your statement and after the balance is reported to credit bureaus. You still don't carry a balance.

What you are describing (having zero balance reported) is called cycling the credit limit. This is indeed a dangerous behavior that can not only affect your credit score but also lead to account closures. Don't do it.

[inetknght]

> You are incredibly confused about terminology here.

Perhaps, but I doubt it.

> You have a balance. And then you let Autopay pay it off in full by the due date, which is after the balance appears on your statement and after the balance is reported to credit bureaus. You still don't carry a balance.

I don't use Autopay. I pay my card off (usually in full every month) when I review the online statement. If I review my statement early and I know that I have upcoming charges then I'll pre-pay to avoid interest charges. Some months end up with effectively a zero balance for the month.

> What you are describing (having zero balance reported) is called cycling the credit limit.

No, I am absolutely not. Cycling your credit is where you charge close to your credit limit, then pay it off, and repeat that several times in a single cycle. Cycling your credit once might mean that you had some big expenses. Doing it repeatedly (eg several months in a row) means that something about you is suspicious and warrants an account review. Maybe you lied about your income, or need a credit limit increase, or you're gaming some rewards system, or you're using a personal account for business, or something that's even more unusual.

[kccqzy]

You are still confused.

Your statement doesn't get generated until the billing period closes. For all intents and purposes, the one number that gets reported to the credit bureau is the balance shown on that statement, which is a fixed value for the whole month. Even if you pay off the entire balance as soon as the statement gets generated, you can see a zero number for most days during that month, but credit bureaus still see the positive number on your statement.

[redblacktree]

I wasn't aware that this was a bad thing. I have a couple of "business" credit cards that I use to segregate purchases for some sole proprietorships that I run. (as well as for the rewards, of course) There are occasionally months where I need to spend beyond the credit limit, and I pay the card early in order to do so. I had no inkling that this could be considered a problem.

[landemva]

It's about the bank knowing their customer and appropriate limits for the customer income. If you cycle $50k in a month on a $10k credit line, and your credit application had your income at $80k/year, the bank may look into it.

[redblacktree]

Ah, ok. The numbers are nowhere near that close. If anyone looked more closely, I think they'd see the spending as legitimate. I did some research after you mentioned the term, and "credit cycling" is different from my scenario, I think. There is an element of intentionality to it, ala /r/churning.

[landemva]

> you have a lot of available credit without ever using it.

I find it funny that the example person with big credit lines, which are unused, should care about a slightly better credit score. The financialization of everything coaxes people to care about numbers that don't greatly matter to their situation - they already have the credit line.

[inetknght]

> I find it funny that the example person with big credit lines, which are unused, should care about a slightly better credit score. The financialization of everything coaxes people to care about numbers that don't greatly matter to their situation - they already have the credit line

Having credit lines in credit cards is one thing. But having that credit line doesn't mean that doesn't mean they "already have the credit line". A good credit score will save you tens- or hundreds- of thousands of dollars with reduced mortgage rates. So it's important to have good credit hygiene with cards to build that score.

Yes, the financialization of everything perverts incentives. Unfortunately that's the world we live in. I certainly don't believe that someone's home should be an investment vehicle. Nonetheless, it most certainly is one right now.