How can Washington Mutual Be So Overleveraged that they go under...

[AZRedhawk44]

... but they are willing as of 2 minutes ago to give me an $11,000 credit limit Visa card, and allow me to transfer thousands of dollars to a 0% interest rate on it?

Doesn't make much sense....

Not that I won't take the opportunity to move $3000 to 0%, mind you.

But it doesn't make much sense.

[Headless Thompson Gunner]

Leverage isn't the problem, per se.  You can be leveraged to the hilt, and as long as your leveraged investments make money all is well.  It's when you're leveraged up on losing assets that you have problems.

Apparently they think you're a safe credit risk.  It doesn't matter how leveraged up they are, so long as you make your payments on time it won't hurt them a bit.

[AZRedhawk44]

It just cost them $3000 to accept my debt, and they'll only be collecting about $50 a month for the next 15 months.

At which point I'll get another 0% credit card and transfer the balance again... or if one isn't available, pay it off in full.

Where's the revenue stream for them?

This will be the absolute last credit card I would ever use, because any charges to it don't get paid off until the initila 0% balance is paid off, so the back balance can acrue 20% interest or whatever it is.  I have other credit cards where that isn't an issue at all.  This one will be frozen in a block of ice in the freezer or stuffed in the safe or similarly locked away.

I fail to see any profit for them.

ETA:  This is now officially my largest credit card, I think.  Not that I'm in the habit of running up my cards to max and finding out what the limits are.  Seriously, though... what on earth do people need $11,000 credit cards for?  I guess I can see having it for international travel emergencies or health emergencies.

I can't imagine trying to make payments on $11,000 at 20%.  You'd be paying $2200 a year just on interest.  It'd never be paid off.

[zahc]

My father was an owner-operator truck driver for many years. He had a giant credit card...like 100k or something. Because he bought like $20,000+ worth of fuel a year, and paid it off.

[Waitone]

Leverage was the problem with AIG.

[ilbob]

The reason is that they want you as a customer. They expect that most people who transfer balances will stay on after the low interest period stops. keep in mind they make almost 2% off every purchase you would make on your card, forgetting interest and fees altogether. banks are not in the credit card game to make a short term killing, but rather a long term stream of income.

For every customer like you who won't be making them any money, there are others who will.

[TexasRifleman]

At which point I'll get another 0% credit card and transfer the balance again... or if one isn't available, pay it off in full.

Keep in mind that every time you do that you lower your credit score a little.  Be careful you don't get to a point where you trap yourself.

[AZRedhawk44]

At which point I'll get another 0% credit card and transfer the balance again... or if one isn't available, pay it off in full.

Keep in mind that every time you do that you lower your credit score a little.  Be careful you don't get to a point where you trap yourself.

Yeah, but a year of steadily dropping the balance on that same line of credit brings my score up higher.

It's a wash, from my understanding.  Anyone have concrete numbers on score-drop when you accept a new line of credit, versus score-increase when you maintain a positive payment history on it for a year?

[AZRedhawk44]

Okay, now WaMu is advertising a 4% checking account on my hotmail page.

[TexasRifleman]

Anyone have concrete numbers on score-drop when you accept a new line of credit, versus score-increase when you maintain a positive payment history on it for a year?

Concrete?  No. Just what happened to me.

My employer provides us all with one of these credit monitoring services, has for years, so I keep a very close watch on all of my credit stuff since it's free.
  I hadn't changed credit cards in years either.

The graph of my credit score was flat for almost 2 years, at 785.

I got a zero interest NRA Visa, did a small balance transfer, and closed a Citibank Visa.  Nothing else.

For the first month, while it showed 2 cards open, it bumped up to 790. My credit score then dropped to 765 and it's been there ever since.  Almost a year now.  I'm waiting to see if it goes back up when the year passes.


Anyway, I know that's not concrete, but it sure pissed me off.  Not a huge movement but nothing really "changed". Same balance, same credit limit.
Nothing else changed my my credit report, nothing.

[AZRedhawk44]

I've been told that closing credit cards will lower your score.

Paid off ones or unused ones are best left open until the company drops you for lack of use.

True?

[TexasRifleman]

I've been told that closing credit cards will lower your score.

Paid off ones or unused ones are best left open until the company drops you for lack of use.

True?

Apparently that's true.  I closed my Citibank because it had a $100 a year fee (American Airline miles)
so they would have never closed it for lack of use.

Seems to me like they just make it up as the go.  The fundamentals of my credit changed absolutely zero, went down 20 points in score.