Applied for Discover, odd APR and limit results

All about Discover & Diners Club - talk about their credit card deals such as the More, Miles, Escape, and others.
17 posts
wjeep47
 
Posts: 2
Joined: Fri Apr 03, 2015 6:58 am
Location: Michigan

Applied for Discover, odd APR and limit results

Postby wjeep47 » Fri Apr 03, 2015 7:08 am

So I am new to the forum, mainly because of a recent interaction with discover card. I applied for a discover card last week, and was approved. Here is the odd part, I was approved for a 15k limit, with a 20.99% apr. This seems very contradicting and odd to me. Below are some facts regarding my credit and current portfolio of cards.

I have a 705 FICO score based on recent approval of car loan, long established credit and carry:

VISA through credit union: 8.49% apr 5,000 limit
Chase Slate VISA: 17.5% apr, 2100 limit
Best Buy Card: for 0% offer $5200 limit
Lowes Card: for 0% offer $6900 limit
Menards Card: for 0% offer $4500 limit

Does this APR offered combined with 15k CL make sense? I am happy to have an offer with a high limit credit card, but the apr seems to not correspond. I know my credit isn't off the chart amazing but didn't think I would qualify for nearly their highest rate yet also one of the highest starting limits.


jcarte29
Centurion Member
Centurion Member
 
Posts: 183
Joined: Fri Jan 30, 2015 1:29 pm
Location: Charlotte, NC

Postby jcarte29 » Fri Apr 03, 2015 1:19 pm

wjeep47 wrote:So I am new to the forum, mainly because of a recent interaction with discover card. I applied for a discover card last week, and was approved. Here is the odd part, I was approved for a 15k limit, with a 20.99% apr. This seems very contradicting and odd to me. Below are some facts regarding my credit and current portfolio of cards.

I have a 705 FICO score based on recent approval of car loan, long established credit and carry:

VISA through credit union: 8.49% apr 5,000 limit
Chase Slate VISA: 17.5% apr, 2100 limit
Best Buy Card: for 0% offer $5200 limit
Lowes Card: for 0% offer $6900 limit
Menards Card: for 0% offer $4500 limit

Does this APR offered combined with 15k CL make sense? I am happy to have an offer with a high limit credit card, but the apr seems to not correspond. I know my credit isn't off the chart amazing but didn't think I would qualify for nearly their highest rate yet also one of the highest starting limits.


Can you ask Discover to give me some of that Limit? LOL they gave me a great 0 rate (primary reason I got it) but only a 2500 limit.
Portfolio:
CITI Diamond Preferred $7,000 [06-16]
AMEX Platinum (Charge) [11-16]
AMEX EDay $12,000 [11-14]
Lowes Store $15,000 [4-14]
CSP VISA $6,000 [7-14]
GM MC $9,000 [9-14]
AAdvantage Red MC $10,350 [10-14]
Discover IT $4,500 [03-15]
Chase Marriott VISA $5,000 [04-15]
Cap One Quick $2,600[4-10]

User avatar
lobbythis
Centurion Member
Centurion Member
 
Posts: 616
Joined: Sun Sep 07, 2014 8:53 pm
Location: usa

Postby lobbythis » Fri Apr 03, 2015 1:42 pm

Seeing your credit profile, I'm incredibly surprised they even gave you that limit. I would not be complaining at all. Most people don't get sh*t from Discover even if they have a decent score.

You have mediocre limits at best with the profile you posted and a 705 is hardly a high score.

flan
Centurion Member
Centurion Member
 
Posts: 387
Joined: Tue Apr 09, 2013 10:16 pm
Location: chicago

Postby flan » Fri Apr 03, 2015 6:59 pm

lobbythis wrote:Seeing your credit profile, I'm incredibly surprised they even gave you that limit. I would not be complaining at all. Most people don't get sh*t from Discover even if they have a decent score.

You have mediocre limits at best with the profile you posted and a 705 is hardly a high score.


Discover gives high limits to people they think will make them money. That includes people with a decent income and no cards with a high limit, even if scores aren't terribly high. The 20% apr, and no intro rate suggests they want him to go spend a bunch of money and pay interest on it.

User avatar
lobbythis
Centurion Member
Centurion Member
 
Posts: 616
Joined: Sun Sep 07, 2014 8:53 pm
Location: usa

Postby lobbythis » Fri Apr 03, 2015 7:59 pm

flan wrote:That includes people with a decent income and no cards with a high limit, even if scores aren't terribly high.


This confuses me. Why would a lender, who is notoriously conservative, want to risk giving someone a limit almost 3x as high as any other card they currently have. There are plenty of instances where lenders specifically will not offer higher limits because they can see the rest of your profile and your limits are too low. Chase has done this to myself and a friend when we both tried to recon for higher limits on new cards.

flan wrote:The 20% apr, and no intro rate suggests they want him to go spend a bunch of money and pay interest on it.


I see nothing special about this. People get offered 0% intro and high APR afterwards all the time. Every stupid mail offer I've ever received hypes 0% intro.

User avatar
CarefulBuilder14
Centurion Member
Centurion Member
 
Posts: 3746
Joined: Thu May 08, 2014 7:42 pm
Location: United States

Postby CarefulBuilder14 » Fri Apr 03, 2015 9:24 pm

Maybe the OP forgot to mention some existing balances? The OP could have high utilization and a clean payment history. Discover could be hoping to earn the OP's loyalty, as well as to generate BT fees and interest.

The lack of an intro 0% period is definitely unusual - assuming the OP didn't just forget to mention it.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

flan
Centurion Member
Centurion Member
 
Posts: 387
Joined: Tue Apr 09, 2013 10:16 pm
Location: chicago

Postby flan » Fri Apr 03, 2015 9:31 pm

lobbythis wrote:This confuses me. Why would a lender, who is notoriously conservative, want to risk giving someone a limit almost 3x as high as any other card they currently have.


Discover being a conservative lender isn't really born out by their financial performance (they have much lower than normal default rate, and very good returns, among the highest in industry), or by some of their behaviors (They issue cards to people who have no traditional credit history.) It's mostly people complaining in forums that they didn't give them a huge limit just because they think they deserve one.

But the answer to why they'd do that is simple. It's the same reason banks do anything: they think doing that will make them more money than doing something else will. Maybe they think that having a big limit will encourage the customer to go run up bills, and pay interest. Maybe they think that giving a big limit will encourage the customer to use their card, and not some other bank's. Maybe the proprietary scoring system they use in house thinks the customer is a better credit risk than fico does. Or that system thinks that while they're not the best credit risk, they'll make them lots of money before they default.

User avatar
lobbythis
Centurion Member
Centurion Member
 
Posts: 616
Joined: Sun Sep 07, 2014 8:53 pm
Location: usa

Postby lobbythis » Fri Apr 03, 2015 10:20 pm

I understand. I still think it's an incredible CL with a great lender compared to what OP's profile shows, regardless on the APR.

takeshi
Centurion Member
Centurion Member
 
Posts: 1733
Joined: Wed Jun 05, 2013 3:12 pm
Location: US

Postby takeshi » Sat Apr 04, 2015 10:52 pm

wjeep47 wrote:Does this APR offered combined with 15k CL make sense?

It's not up to us to determine that. It's up to Discover. FWIW my initial limit and APR were both lower than yours. I've had it for about a year and its CL is now a bit more than double and APR was reduced once.

I'd +1 flan's entire post. Discover made a decision based on your credit that they thinks makes sense for them. It doesn't matter if you or I or any other creditor (seems like this is your basis for comparison) thinks it makes sense.

Enjoy your CL. Manage your TL responsibly. Ask for an APR reduction when your credit improves.

lobbythis wrote:This confuses me. Why would a lender, who is notoriously conservative

I wouldn't simply label them as conservative as that doesn't properly describe them IMO. They're notorious for just this sort of thing.

wjeep47
 
Posts: 2
Joined: Fri Apr 03, 2015 6:58 am
Location: Michigan

Postby wjeep47 » Tue Apr 07, 2015 9:09 am

I should add a few notes to this post.

First:

The actual exact offer was 0% Intro APR until 10/2015 (6 mo no interest) 18 months 0% interest on BT for 18 months. Final APR was 17.29 plus prime.

Second:

I misinformed on my credit score and limit on one card. Not off by a lot but my FICO score is a 715, and my experian score is 722. I followed up with an updated check when I received this offer for my card. Chase currently has a 4,000 limit, not 2100 as previously stated.

Third:

As I look into this more, I believe my income and payment history are a factor in the decision for CL. I do have impeccable payment history, but my Utilization is more in the 55% range currently (baby on the way) usually try to keep to the 30% rule. I imagine if I brought my utilization down, I could see an increase of 20 points or more on my scores. I did just finance two cars which doesn't help the overall picture.



Return to “Discover, Diners Club”

Who is online

Users browsing this forum: No registered users and 0 guests