Often1

Hardly new.

Securitizing card debt took off when the MBS market dropped through the floor in the last financial crisis. What is new is that most securitizations involve a tighter sets of reps and warranties. That is what puts the squeeze on new credit today.

GUWonder

Securitizing credit card debt took off well before the 2008 financial crisis.

And the point is that the card-issuing banks have a lucrative business that comes from card-related securitization and the related derivatives business itself and aren’t as directly and extensively on the financial hook for credit risk in the manner that was suggested in the exchange to which I replied.

RNE

No, what's a red flag is when you charge up your card, pay it down, and then charge it up again, and pay it down again, etc. in one billing cycle. You wouldn't be doing that so you're fine.

serpens

Thanks, I hadn't understood that repetition in one cycle was the issue. I think I've got it now.

anabolism

I normally pay the full balance on every card every statement, but I have a 0% on one card and charged taxes on it. That card is now right at the credit limit (less than $50 remaining). It dropped my score a few points, but still nothing to be concerned about.

tstauck

I don't necessarily agree with this. I've had a number of times I make a large purchase, such as appliances, pay it off a week later, then charged my kids braces, pay it off, all with no negative effect.

pallhedge

With all due respect, it doesn't matter of you agree with this or not. What you described is credit cycling. Many banks don't like this activity. At the very least, it will invite scrutiny; at worst, a shutdown.

mia

Paying early is not a problem. In doing this did you spend more than the card's credit limit in a single billing cycle?

gengar

Pre-pandemic, I cycled CSR more often than not ever since I got it, including several months that I've cycled it multiple times. Recently I've been cycling my Prime CC due to [4%] cash back promo and the (relatively) low credit limit. Cycling may very well result in scrutiny as others so often seem to suggest on this forum, but obviously I've heard nothing from Chase about it. I've never thought it would be an issue until reading these posts. In fact, Chase has actually been rather aggressive about unilaterally increasing limits on cards that I've cycled.

mia

It sounds as if your account has been scrutinized, and you have heard from Chase, in the form of a higher limit. However, if Chase had not been willing to extend you more credit the outcome could have been different.

RNE

Yes, some people cycle their credit limits and don’t get shut down. Others aren't so lucky. Read this article about credit cycling... https://www.asksebby.com/blog/what-i...hould-avoid-it

RNE, admitting I drove a car while drunk (in my youth), yet I never got caught or into an accident. Therefore, drunk driving must be safe.

notquiteaff

Here is my scenario:

I have six Chase cards, total credit limit near $100k. My monthly spend is nowhere near the limit of any of the cards, so I pay the full balance a few days before their due date.

Turns out my Freedom Unlimited has a relatively low limit of $8k, which never bothered me since I rarely used it for large expenses (for me, usually travel, which goes on the CSR or Plat).

But with the current Pay Yourself Back option, I have been putting more on my FU. Specifically, I charged my Q2 and Q3 estimated taxes and even considered pre-paying my estimated taxes for Q4 now. Which, together with health insurance and other misc charges would require cycling (or I could request a reallocation of credit from other cards). Not going to do that for the relatively small reward, but I do wonder if cycling is per card or factors in the overall credit the bank has extended to me. If I was money laundering (as seems to a concern based on RNE’s a link), I could just spread it across cards instead of cycling one.

gengar

Except that the key issue is whether that scrutiny resulted from cycling the cards. It's impossible to know. AMEX, Chase, and Citi have all raised limits on at least some of my cards, umprompted and without cycling. AFAICR Capital One is the only issuer I currently use who hasn't.

Also, it's been at least three years since my last credit line increase on my CSR and I've regularly cycled it since then (pre-pandemic, anyway).

I made no suggestion whatsoever of risk in my post - no need to make it out as if I did.

RNE

Exactly. You should have done so.

gengar

Get off your high horse. I reported a fact (which, notably, is something many posters in this thread have failed to do). OP and any others reading this are adults who can assess any risk on their own and make their own decisions.