Pre-pay for large purchase
Apr 22, 2018, 12:37 pm
#1
Original Poster
Join Date: Jul 2006
Posts: 131
Pre-pay for large purchase
I have a large travel purchase planned (~$20k) for my CSR. I'll stay within my existing CL and pay the balance when due. But I'd like to avoid a big hit to my credit score for the large balance. I'm thinking that I could perhaps avoid the credit score hit by pre-paying some portion of this charge to create a credit balance before the charge posts.
Is this possible? a good or bad idea?
Is this possible? a good or bad idea?
Apr 22, 2018, 1:05 pm
#2
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,952
Sapphire Reserve (in common with all VISA Signature, Infinite and MasterCard World and Elite card) has a no-preset-spending-limit feature. The listed credit limit is the maximum balance that you can carry (and pay interest on), it is not the maximum amount you can spend.
If the purchase is below the credit limit, make it, and pay when it posts to the account. What would be the benefit of paying beforehand?
If the purchase is below the credit limit, make it, and pay when it posts to the account. What would be the benefit of paying beforehand?
Last edited by mia; Apr 22, 2018 at 1:14 pm
Apr 23, 2018, 12:48 pm
#4
Join Date: Jul 2015
Location: Florida
Programs: Delta SkyMiles; Hilton HHonors; NEXUS; National Emerald Club Executive
Posts: 365
Chase will let you get a credit balance, but I'm sure it has limits. Also, not necessary to achieve your goal. Here's how you do it:
1) Don't make the purchase just before your statement closing date.
2) Make your purchase
3) As soon as the transaction posts, make an online payment
This will avoid having to toy around with prepay limits, and as long as you obey rule 1) so that the statement doesn't close before your payment posts, nothing should be reported to credit.
Finally, the effect of large balances on credit are temporary. I've had large transactions drop my score 10 points in the past, only to have it shoot right back up once the payment posts. But those were balances that crossed a statement boundary.
1) Don't make the purchase just before your statement closing date.
2) Make your purchase
3) As soon as the transaction posts, make an online payment
This will avoid having to toy around with prepay limits, and as long as you obey rule 1) so that the statement doesn't close before your payment posts, nothing should be reported to credit.
Finally, the effect of large balances on credit are temporary. I've had large transactions drop my score 10 points in the past, only to have it shoot right back up once the payment posts. But those were balances that crossed a statement boundary.
Apr 23, 2018, 7:00 pm
#5
FlyerTalk Evangelist
Join Date: Aug 2002
Location: Intermountain West
Programs: Too many to list
Posts: 12,068
My CSR has a listed CL of $8000. My last stmt. showed a balance of ~$3300. My TU credit dropped 14 pts. My total "credit card use" is only 6%. So I can only deduce they are punishing me for being over 40% usage on one card. 
My EQ score dropped 3 pts. Both are still over 800 so I'm not concerned. But if you don't prepay before stmt hits you may face a big, though temporary, drop in your score.
My EQ score dropped 3 pts. Both are still over 800 so I'm not concerned. But if you don't prepay before stmt hits you may face a big, though temporary, drop in your score.
Apr 24, 2018, 5:58 pm
#7
Join Date: May 2009
Posts: 1,570
My CSR has a listed CL of $8000. My last stmt. showed a balance of ~$3300. My TU credit dropped 14 pts. My total "credit card use" is only 6%. So I can only deduce they are punishing me for being over 40% usage on one card.
My EQ score dropped 3 pts. Both are still over 800 so I'm not concerned. But if you don't prepay before stmt hits you may face a big, though temporary, drop in your score.
My EQ score dropped 3 pts. Both are still over 800 so I'm not concerned. But if you don't prepay before stmt hits you may face a big, though temporary, drop in your score.
Apr 24, 2018, 9:05 pm
#9
Join Date: Dec 2009
Location: New York, NY
Programs: AA Gold. UA Silver, Marriott Gold, Hilton Diamond, Hyatt (Lifetime Diamond downgraded to Explorist)
Posts: 6,776
My apartment's management company made a mistake and didn't add a fee (normally they charge 3%) for paying rent with my credit card so I put three months through to clear minimum spending and get to a points goal I have for a trip. I then paid Chase about a week later but before the statement date. No credit score drop or debt balance reported. My landlord on the other hand did try to get me to pay the $225 fee that should have been included but dropped that fight quickly.
Apr 26, 2018, 10:24 pm
#10
Join Date: Apr 2015
Posts: 456
Seriously though. Unless you're basically in the middle of applying or planning to apply for a major loan (ie mortgage) within the next 3 months, there's no point being concerned with small point hit from utilization. I've had my score drop 15-20 points one month and it was back up about 15-20 points the next month because of utilization changes. It doesn't really have a long term effect.
Apr 27, 2018, 8:05 am
#11
Join Date: May 2009
Posts: 1,570
Our credit scores are used for a lot more than loans and are compiled using different methods resulting in widely diverse scores. For example, we switched home owners' insurance companies. When we got the rate quote, we were really surprised to see that we weren't in the top credit category and were therefore being charged more. The disclosure was explicit that we were being dinged because of the credit score they were using. It was almost 100 points lower that the scores showing up on Credit Secure etc. So, I prefer to keep mine as high as reasonably possible according to the relatively easy to find calculations. That way, when I'm dealing with a surprise, such as with the HO insurance, I've limited the damage. Also, as to how quickly it recovers, in my experience that's all over the place.
