- Platinum Member
- Posts: 93
- Joined: Wed Aug 17, 2011 10:53 pm
- Location: USA
Hey there Money card!
I was pondering over this exact same question, too, and I have some reason to think that carrying a balance CAN affect the lowering of your credit card's APR.
Consider this series of scenarios (sorry about the long list; it was the only way I could think of to make it easier to read):
- I own an AMEX Blue and a CITI Dividends
- My sibling owns an AMEX Blue and a CITI Dividends
- I have the regular Dividend card
- My sibling has the World version of the Dividend card
- I have been unemployed before and employed without earning very much
- My sibling has never been unemployed and has historically earned more than I have
- During my unemployment owing to illness, I ended up doing a payment plan with CITI
- My sibling has never done a payment plan
- I have carried balances on both cards over the cards' lifetime
- My sibling has seldom if ever carried any sort of a balance on either card
- I do not have a history of late payments or paying only the minimum
- My sibling does not have a history of late payments or paying only the minimum
- I have a single digit APR on my AMEX and a very low double digit APR on my CITI
- My sibling still has mid to medium-high double digit APRs on both cards
Given all that I said above, I honestly sometimes feel that credit utilization - how a person uses their credit and what their patterns are - can and do influence the decisions of a creditor when it comes time to consider things like... CLIs and APR reductions.
I can very honestly say that I am not the person who pays in full always and forever and is late never ever.
My credit usage involves bouts of paying in full and bouts of carrying a balance from time to time depending on what exactly I'm doing and what phase I'm in in regards to my personal life and business life. Regardless of how 'bad' my phase might be/have been, I watch/watched how much credit I use (I stick below the 30% and 25% is my cut-off even when I'm in a position where I might need to use more credit) and make sure my payments are on time.
Bearing this in mind, I really appreciate the fact that I DO have such low APRs for someone of my age and of my level of credit establishment because for me, I actually DO use my credit cards to carry a balance from time to time and a lower APR helps me to stretch my money (with a fee of some sort, of course) when I really need to.
And with THAT said... I wonder if maybe that's what my credit report shows or if maybe that's how credit companies see my credit report.
"Here is an example of a credit user who has a history of not only responsibly using credit (paying off credit cards, no late payments, minimal amount of credit inquiries, not a ton of credit lines opened, low debt to credit ratio) but also responsibly carrying balances (paying a card off in 2, 3 months etc), too, when needed. Therefore, since this responsible person utilizes our card to carry balances from time to time, they could make use of a lower APR and utilize it responsibly. We will earn money/interest from them because we know they will eventually pay it all back in full within a few months of carrying the balance."
A person paying in full all the time = not carrying balances/not utilizing APR/APR doesn't matter
A person who carries a balance from time to time = carrying balances/utilizing APR/APR does matter
But who the heck knows, really, and the only reason I share the thoughts that I do is because of my own personal experience.
AMEX: Everyday (MR), Macy's (cobranded)
MASTER: Citibank Dividend Platinum Select (non-World version)
VISA: Chase Amazon Signature, Chase (bank issued)
GE: Care Credit (medical expenses), Macy's (store), JCP (store)
AMEX: Costco True Earnings
VISA: Chase Ink Cash