I charged Discover pretty heavily during my double bonus year. The main thing I would avoid is charging more than your credit limit during a statement cycle. That isn’t the only red flag, but it seems to be the most common across all card issuers that eventually gets their attention. Just for data point, I got almost 4k reward bonus.
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Thank you so much, loper, for helping me. I really appreciate it. Your data point is absolutely invaluable.
I also agree strongly with your take, and your opinion, about credit limit cycling. I stopped completely doing that last fall, and I have no regrets or second thoughts. It is better, I think, to add credit cards and use those new lines than it is to recycle credit on existing cards.
“Pigs go to slaughter.”
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Before reading here that recycling the credit line within a statement period might be a bad thing, my Player Two was doing that quite regularly for several months last fall with the Discover Miles card. Nothing has been said, and points were awarded as usual. We try not to do that any more, though.
Ditto here, StatGren. I was doing it last fall and all was OK. However, I no longer cycle my line because like you I have come to believe it is imprudent . . . . even in the absence of AA.
I do charge my cards right up to the limit though, each month, and then pay off one time just before statement is cut. I’m not certain either that practice is smart. Am hoping for the best.
Discover is the only card I have that asks if I want cash back when I make a purchase. It’s like using a debit ATM card. At first, I thought this would be treated as a cash advance so I declined. I recently had the guts to try it and it just adds the amount of cash I received to the total. So now I really don’t have a reason to visit an ATM anymore. So, if I spend $5 at a supermarket and get $20 cash, is Discover going to give me 5% cashback on $25?
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Discover calls this “Cash Over” since they call some of their rewards “Cash Back.”
Discover does not award ANY “Cash Back” on your “Cash Over” amount.
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Interesting. I remember Discover doing this 15-20 years ago but thought it had stopped for some reason.
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They stopped paying rewards on the cash over amount.
Back in 2015 4th quarter, Discover offered a 10% cashback promo for ApplePay, up to $10k. I went all-in on 2 Discover-It cards (one for me and wife). They flagged about 40% of our gift card purchases as not qualifying purchases (without verified receipts that I didn’t give for obvious reasons). I heard was not terribly uncommon during that time for gift card purchases to be flagged, even when varying amounts by throwing in a candybar.
We received our double cashback rewards on qualifying purchases as planned and I had written off the rewards for the flagged purchases. To my surprise, wife and I both received additional checks about a year later for the full remaining amount. After internal review, Discover had decided to pay it out. Total payout was $4k, minus my costs of gift card purchases and liquidation.
Long story short, I wouldn’t expect any issues with Discover paying out your double cash benefits so long as you don’t do anything foolish or unlucky enough to prompt a shutdown before then.
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Thank you for your help, Corndogg. I very much appreciate your input!
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HSBC update
I originally applied for HSBC’s cash rewards Mastercard because I needed Mastercard credit. I did not like HSBC but my opinion has evolved. Now I’m just sort of neutral on them.
HSBC has paid me rewards as agreed. I’ve collected more than $800 in rewards over the last seven months. This on a minimal credit line of roughly six grand. So I’m in no position to blast HSBC and I will not do so. Here are the negatives I have encountered:
HSBC is slow as molasses in everything they do, performing FAR below industry standard. If you pay them via ACH do not expect to see that payment in your account for close to a week!! Buy something and the charge takes forever to appear. It is as if there exists a delay line between HSBC’s computers and the real world.
The HSBC website is a split up nightmare, again much more poorly designed than websites of my other cards. I’m only now just getting the hang of doing business with HSBC after many months.
But at the bottom line it’s the money that matters. The HSBC card has a decent 1.5% reward and they pay. Period. And I’ve never been targeted with any hassles or warnings. Thus I continue to do business there. While not all that enjoyable, doing so is profitable.
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Just got my butt kicked by PayPal/Synchrony bank. Figured I might as well document my double error as a “do not do what I did” data point:
First of all I violated Argyll’s Rule. For newcomers unfamiliar, Argyll wisely teaches the importance of paying off you credit card 100% before your statement closes . . . . if you want to maintain your credit score.
I didn’t have the money to pay off my PayPal card timely. This was my first mistake. I ended up paying three days after my statement closed and Synchrony Bank had reported my high balance to the credit agencies (I max out the card each month).
So in a “stroke of genius” (my second error) I telephoned the bank, following my payment, and requested they make an unscheduled report to the credit agencies of my (then) zero balance. The rep was very understanding and accommodating. He said he was sympathetic to my dilemma and the bank would be happy to make the extra report. No big deal.
And they did. But not until two weeks later!! By that time my card was once again charged up close to the max, on the new cycle of course.
Bottom line for me was a sixty-three point credit score haircut.
Takeaway from this experience: Never violate Argyll’s Rule.
Period. No exceptions. If you don’t have the money, look harder and find it somewhere. But, if you care about your credit score, DO NOT violate Argyll’s Rule.
Dramatic much?
While I agree that fully utilizing the credit limit on even one among many cards will have a significant temporary effect on your score (along the lines of 20 points or so), and this can be avoided by paying down the balance before the card reports to the credit bureau (usually, but not always when the statement period ends), someone who isn’t maxing out their credit line is better off taking advantage of the float and paying it off near the end of the grace period.
In other words, I submit that fully utilizing the credit line frequently thus requiring this early payment is the exception, not the rule.
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You’re saying, we should pay off credit card before it closes. I always pay my cc bill in full at the end of statement date. Why, because I may make another charge before the end date.
I know that Argyll’s Rule is usually right on. Maybe wait until ending date, to pay??
Keeping your credit score high is essential if you are frequently applying for credit or credit limit increases. It’s also useful for things like insurance, banks, utilities, landlords, etc. They can do soft checks any time.
To simplify things, I pay before the statement date out of habit so I don’t have to think about it or wait a month or two when I want to apply for credit.
I have only two cards to pay off, and never maximize them.
This is very true, but to a point. The absolute number isn’t as important as people think. There’s no meaningful difference between 812 and 835, for example. None whatsoever.
That system works for you and that’s great. For me, I like using the interest-free float to my advantage. And my credit card payments are automatically entered into my check register, and payment in full on due date is automatically made with no thinking about it required, except to watch my register to make sure it never goes negative. I’ve got about 25 credit cards (not all are in use at all times, but all are used at least twice a year) so any system that required thinking about it doesn’t work well for me. The one outlier to the system is NFCU which does not allow you to automatically pay in full each month.
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Argyll well understands, and teaches about, what is called “utilization”. The latter is the amount of your credit line which the credit agencies think you are using. There are two kinds of utilization:
Individual, or card by card, utilization is the percentage of your line you charge on each separate card.
Overall utilization is the percentage of your entire credit line (all cards) you charge.
Utilization has a major impact on your score. In the screw up I documented above, my utilization went from 0%, as Argyll recommends, to something over 10%. The credit agencies sensed financial weakness (not true) and lowered my score a LOT.
I made a mistake, then turned around and while trying to correct it I made a second error. Not smart. But I guess this is how the experts learn.
And BTW, how Argyll is doing $5M/year on just two cards is WELL beyond my ken. I’m having enough challenge doing my second-rate $1M+/year using all eleven of my cards and maxing them all out every month. But importantly, I have no expectation of Argyll sharing his secrets. This is because I’m not entitled to know. Argyll has my admiration whether or not he reveals his methods. Just so long as he understands I’m working hard as I can to catch up with and equal his remarkable performance.
“…automatically entered into my check register…”
I pay my credit cards directly from my savings account. I ordinarily have only a few hundred dollars in checking.
“There’s no meaningful difference between 812 and 835, for example. None whatsoever.”
The difference in my credit scores is much greater than that between a 0% utilization rate and even 2-5% utilization rate.
I started paying early when a balance transfer caused a debt of a few thousand dollars to disappear from my report for a few weeks. My score was up 60 points.
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A very valuable post nevertheless and your input is much appreciated. Thanks!
My own experience is far more limited than yours. I’ve only been at this roughly a year so far (see when this thread commenced). But within that limitation I surely confirm what you wrote.
Really only difference for me is that, because I am engaging in a form of MS, I do not risk recycling my credit line. Instead I try to spread spending out over as many cards as I’m able to manage.
I can recall posts, here in this forum, from ProfessorEd and others, who encountered some AA (adverse action) when recycling credit. But I agree totally with you that, while the practice might attract AA from some CC issuers, others appear simply not to care at all. For me, since I need all my cards and could really be harmed by AA, I do not recycle my line on any cards.
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Your credit score and report is based on a snapshot in time. There’s no “memory” of your prior utilization, except to the extent it shows your card’s highest balance over its lifetime. Therefore, if you were already at 100% utilization a year ago, have 0% util on your Feb 1 report, 100% utilization on your Mar 1 report, and 0% utilization on your Apr 1 report, your Apr 1 score should be the same as your Feb 1 score.
Of course, as Shinobi points out, credit card companies you have accounts with generally have authority to pull your report at any time. So if an issuer pulls your report on Mar 1, then you clean up your credit to apply for a new card on Apr 1, even though your current credit report for the new application shows 0% utilization, the issuer will know that you were 100% just a month earlier. Whether any individual issuer takes that into account isn’t public information as far as I know. So, as Shinobi also points out, if you’re planning to apply for more credit from an issuer that has authority to pull your report at any time, the safest thing to do is never let utilization report as that high. That said, whether that potential benefit is worth it or not to lose some of the benefits of not paying off in full before statement close is an individual question. If you’re cycling 100% of your line each month, you’re not taking advantage of the float anyway, so the downside is probably only in certain protections.
All that said, your card issuer knows how you handle your own accounts with them, regardless of how it shows on your credit report. So if you’re cycling 100% of your credit lines each month with one issuer, they know you’re running that much through your accounts and it doesn’t really matter that your credit report technically shows as 0% utilization. It is public information that some, if not most, issuers take this into account.
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