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I have a card for which I had a 0% intro period in which I carried a balance of around $10k, until the intro period ended. Then I paid it off in full so that I have a $0 balance - from $10k. I'm sure they were hoping I would pay all that interest - thousands per year in fact. I don't intend to do so. Over 20% interest is not a loan I'm interested in.

Do banks look unfavorably on these balloon payments? Or do they hope that you will use it again and eventually pay some interest, and maybe not care about whether you paid it off? After all you decreased their liability from $10k to $0.

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  • 2
    What do you mean by “look unfavorably”? Are you asking about specific consequences, or simply wondering about the opinion of bankers? May 19 '20 at 2:38
  • I don't know what you mean by "unfavorably", but I've had - oh, maybe 5 cards with %0 interest introductory periods. Back when they were more common than now, I'd put all my charges on one, pay it off just before the 0% period ended, and move to another card. Never saw any sort of negative reaction from the issuers (though I don't really have a basis for comparison): I still have most of the accounts, they keep wanting to up my credit limits or have me take out cash loans &c.
    – jamesqf
    May 19 '20 at 2:43
  • @BenMiller-RememberMonica I suppose I am referring to any consequences (e.g. less desirable terms, less credit benefit, less desirable customer, etc) because of their opinion - not their personal opinion which is meaningless, but their company opinion. So, both, in a way. I could care less what they think of me personally, but I do care about benefits or consequences.
    – finance
    May 20 '20 at 16:44
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From a Frontline episode "Secret History of The Credit Card" produced by David Rummel & Nelli Kheyfets.

BEN STEIN: The credit card companies hate people like me, who pay off our bills every month. And I know that because I ran into a fellow I went to high school with on the street, and he told me he worked for a credit card company. And I told him about how much I use credit cards and how I pay them off every month, and he said, "Oh, we hate you. We hate you guys. We call you deadbeats."

NARRATOR: "Deadbeats," in the upside-down world of the credit card business, are the people like Ben Stein, who pay off their bills on time. The industry's best customers are the 90 million Americans who don't pay off their credit card debt. They're called the "revolvers."

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  • So a someone who works hard, makes good financial decisions, and pays their debts is a "deadbeat"; and someone who is actually a deadbeat who doesn't pay their debts is a "good customer". Really sick industry. These people should all be imprisoned for usury. This is literally a crime against humanity. Profiteering off the poor. This moral crime is called "usury" and is still punishable by death in some countries even today. It should be punishable by death in all countries. Exploiting the poor is pure evil.
    – finance
    May 20 '20 at 16:41
  • More like carrying a balance = "revolver" and paying off the balance each month = "transactor". If you don't pay your debts you're not a revolver but delinquent, and card companies don't want that kind of client.
    – C8H10N4O2
    May 20 '20 at 17:32
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Credit card companies have three sources of income.

  • Interest you pay.
  • Fees you pay.
  • Transaction fees the stores pay.

If you pay off the balance before interest accrues, that source of income for your account is zero. If you pick a card with no annual fee and you avoid any other fee they charge, that source of income will also be zero.

The transaction fees can still be significant. I have never had a card cancelled because I only generated transaction fees. Most of my cards over the years encouraged more usage by offering me cash back, points, or miles. Over the years they have increased my credit limit to encourage more usage, or to be used for larger purchases.

They hope that after paying off the large balance, you will keep using the card. Of course they hope you will generate income all three ways, but will be happy if you generate more than enough income from transaction fees.

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No, they still like you as a customer.

Their first preference are customers that have money and still don't pay their credit cards off, because they pay an arm and a leg in interest.
But a customer that pays early is still better than a customer that pays never.
As others mentioned, they still make fat money on the fees from the vendors you use the card at.

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