I didn’t mean to convey the wrong tone in my email. I wasn’t trying to second guess your post.
I know my situation with the high balance to limit ratio is not the best. I said that in my first post. It’s also not really hurting me because my credit is in the B+ range.
What I want to do is refi a property to pay off the cc’s. Then I want to use the credit cards for short term loans on a property. Kind of like a Hard Money Loan. I figure it’s basically the same interest rate but the advantage is that I don’t have to go through the whole “presentation” thing proving the before and after values to the HML and I can finance 100% of the costs. I will basically be cash advancing about 50-60% of the limits on these cards for anywhere between 3 and 6 months at a time. Do you think this will hurt my credit?
I think there’s something wrong here. I can’t understand why someone (your wife), with A- credit would only have a $5k limit. I also can’t imagine why they would raise the interest rate that much. 5.9 to 18.9 is quite a jump.
The only time they do this is when you miss payments.
Don’t take this the wrong way, but I think there’s something you are leaving out of your story.
That’s fine, you never really mentioned that before.
You idea is good and could work, however you have to treat the credit card as you would a HML. Use the money to get in and then cash them out quickly. HML also don’t affect your credit as much as increasing balances on a credit card. If the card is used to finance a rehab, then that’s fine, b/c you’re expecting to cash out soon. A rental? unless it’s at a VERY good price, I wouldn’t do it. The interest you’d pay on the card is more than the interest you’d earn on your investment, or if you invested in the market.
I have not left anything out. I have been very cordial here with you. But if you want to go down the road and calling me a liar, we can take the gloves off. You must not have very much knowledge in the CC industry to believe that the only time a CC company will jack the rate up is when you miss payments. Son, you have a lot to learn. I will restate my previsou statement; all the CC company has to do (if your rate is not stated as being fixed for life, and very few are) to raise your rates is to give you proper notice.
Now do you care to continue down this path?
To be honest, we were not very profitable for the CC company. We tend to pay our balances off every month. Very rarily do we leave a balance (when there is a balance, ususally about 1,500 for a month or two) on the card(s). Also, we use credit cards for specific purposes, with a means of financing not being one of them. As far as the lack of balance we have no need for a revolving account with a large balance. Again, our choice; 10k limit on the Amex Skymiles card (only card) is plenty for us right now.
It’s normal that if you have increased debt a credit card company can raise your score. It’s primarily based on the balance to limit ratio. Besides the fact that companies can raise your rate as they see fit. It’s in your acknowlodgements and fine print.
Re: What do you think of this idea?? - Posted by Randy (SD)
Posted by Randy (SD) on August 31, 2004 at 14:18:51:
Ok…Ok I admit I didn’t see the humor, reading your reply to Bob about your wifes cc acount I can believe it. They will use any excuse to jack the rate.
Thanks for the response.
The way I would use it for a rental is as such…use the cash advance to make an all cash, very low ball offer on a property. Telling the owner, I can close in 7 days (or whatever) and you know I’ll be able to close cause it’s all cash. Then, go to a mortgage company, such as countrywide who will do a mortgage on a property owned free and clear for one day (I think they still do this, but don’t quote me.)
If my all cash buy price was low enough I could actually walk away with cash, or just keep the property at a low LTV.
Then pay off the cc’s and charges and interest…Rinse and Repeat!
The beauty is that in my area you can buy a $40k FMV home as an REO or @ a tax auction for like $10-$20k.
Stan, I never meant to call you a liar. There was really no need to get offended.
I just can’t imagine this happening, and let me tell you why. I’m 23 years old. I’ve had cc’s since I’m 18. I’ve managed to amass a $24k credit line. I have been holding a very high balance to limit ratio for 2 years. I financed some college, expenses and a property through these cards. Not one of my interest rates has ever went up. In fact, they have gone down significantly over the years, even when my balances have approached 99% of the credit line. So, this is why your statement was so hard for me to believe. But, I apologize, seeing the other posts I’ve realized that my situation is a unique one, maybe even lucky.
I didn’t mean any offense in my post. I just thought maybe you may have had an error or something on your credit report that you didn’t know about.
Sir, I know I have alot to learn. I never professed to know anything. But, I will say i do pretty well for myself. I commit to learning everything I possibly can. I’m 23 years old have 2 bachelor’s degrees, 2 investment properties (5 units), 2 cars (one worth over $45k). I grew up in a middle class family and was never given anything. So, when I finished college about 18 months ago I had a net worth of -$100,000. yes, negative! My net worth now is pushing $85k.
That sounds like a good idea…my thing is, you never mentioned it in your original post, hence the confusion.
Getting homes at $10K-$20K on a CC is fine!
humor, reading your reply to Bob about your wifes cc acount I can believe it. They will use any excuse to jack the rate.