High Debt to Income Ratio - Credit Cards

[socalhopps925]

I'm a fourth year medical student and I tried to obtain a travel card to stack up points for interview travelling however, I have been denied by both chase and BoA. Both said my credit score is fine (it's 729, I have 3 total credit cards that I always pay in full and on time) but that my debt to income ratio is too high. I will have a total of $360K in student loans upon graduating in a few months. Has anyone else had a similar problem? Even with a resident's salary my debt load will be too high. Appreciate any recommendations!

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[TMP-SMX]

Can you be added as an authorized user with a parent? Will you be able to pay off those charges before the statement is up?

 

[Mman]

I'm a fourth year medical student and I tried to obtain a travel card to stack up points for interview travelling however, I have been denied by both chase and BoA. Both said my credit score is fine (it's 729, I have 3 total credit cards that I always pay in full and on time) but that my debt to income ratio is too high. I will have a total of $360K in student loans upon graduating in a few months. Has anyone else had a similar problem? Even with a resident's salary my debt load will be too high. Appreciate any recommendations!

if you already have 3 credit cards my suggestion would be to not worry about opening another simply to get a few travel points.

 

[damon30]

Echoing the previous statements, my recommendation would be to avoid another card. Are the points from your travels really that lucrative?

 

[AMEHigh]

Echoing the previous statements, my recommendation would be to avoid another card. Are the points from your travels really that lucrative?

I’ve gotten a lot of free flights over the past couple of years due to points. So yes it can be lucrative and free money. I pay off my cards every month.

OP, I’m not sure I have specific advice. I have high SL and a mortgage. Over the years I’ve been denied once for a card, but otherwise have had no problems with Amex platinum, chase reserve, citi, delta Amex, etc. I personally find it easier to just stick with one card to get the most points (right now I mostly use the Amex platinum). I will occasionally apply for a new card when they have a high points bonus for signing up.

 

[socalhopps925]

I probably will have a lot of travel this year due to interviews, but I imagine travel will be pretty darn low once residency starts next year. I guess I'll just stick with the cards I have now (I should mention 2 of them are store cards so they get minimal use). The other one is a BOA card that gets 3% on a pre-set category, 2% on groceries, and 1% on everything else. Thanks for all the input. I just hope that this same issue doesn't hold me back in the future.

 

[sliceofbread136]

360k in debt and asking how to get more credit cards to better use points. ‘Murica!

 

[socalhopps925]

360k in debt and asking how to get more credit cards to better use points. ‘Murica!

That's right, only in america would it cost this much to attend medical school. I can't help it that I'm from a middle class family that can't afford to pay for medical school unless they want to stop saving for retirement. I also can't completely defray the cost of interviews. I purposely applied mainly in the region I'm from to reduce costs so I can mostly drive to and from. Unfortunately, the travel cost is still not 0 and requires some trains, hotels, etc. I figured I might as well try to maximize on points in order to get some cash back or perhaps earn a free hotel stay or something for a future interview. I wouldn't be so quick to judge, it's good financial sense to maximize credit card points if and when you can. It's not like this is fun for me.

 

[NITRAS]

Look, credit cards aren’t a wealth building tool.

Some people make a few hundred bucks a year on them, but most people pay way more in fees and interest. The truth is that the credit card is the most marketed item out there. It’s a multi billion dollar industry. They’ve done such a great job that people are looked down upon for not using them.


PS blaming others for your problems accomplishes nothing.

 

[TheHungarianCPAPFS]

Credit card companies are not in the market to lose money. They either make the 3% the merchant pays to them and or the interest the credit card user pays. However, they need to make sure that you have enough cash flow to be able to pay them back, otherwise their 24% interest doesn't do any good for them. So they calculate the minimum payment on all your credit cards, student loans and take about 40-50% of your take home pay, after taxes and payroll taxes are taken out and see if you have any funds left to pay them back. If not, they will not take the risk of giving you a card, rack it up, then they will have to write it off as bad debt, as not guaranteed like a student loan.

Your other option is for someone to co-sign with you, so if you dont pay, the credit card company can go after them for payment, or to get a secured credit card, where you put down into a CD or a savings account $1-5K, and that will be your credit card limit or some portion of it. Then if you dont pay, the credit card company just takes the money from the account to pay off the balance. Hope this helps.

 

[The PA Investor]

I'm with everyone else here. Although it would be nice to have the miles, I don't think the benefit if adding another credit card would help. However, you could discontinue the two store credit cards and get other ones. The Physician on Fire has an excel sheet of the best credit cards to use including for travel points.

Here's the link.

Credit Cards for Free Travel & Cash Back - Physician on FIRE

Who doesn't love free travel from a credit card? How about cash back or Bitcoin? The doctor of credit card rewards shares top cards, strategies & a tracker.

www.physicianonfire.com

There's a couple cards where you can get 500 to 600 dollars back if you use about 3k in 3 months. Now obviously don't just spend the money to get the 500 dollars but if you're going to be flying significantly then this is an opportunity to make some money back.

Although these cards could help, you still have to apply for them as well and may face the same situation as before. Personally I feel like 3 credit cards for a single person is the max anyone should have.

Best of luck to you.

 

[Stroganoff]

Echoing the previous statements, my recommendation would be to avoid another card. Are the points from your travels really that lucrative?

Travel credit cards are the most lucrative bang-for-the-buck compared to straight cash back cards. (See flyertalk.com - those nerds pretty much travel for free...it's insane. )

The other one is a BOA card that gets 3% on a pre-set category, 2% on groceries, and 1% on everything else.

Store credit cards may be categorized differently than the typical Visa/MC/AMEX/Disc cards in certain algorithms, so it could look like you only have 1 credit card instead of 3.

Can you set the BoA 3% category to travel? That would be your worst case scenario. You can couple that card with joining a frequent flyer program and a hotel loyalty program and racking up points during interview season. In the meantime, no harm in trying for other cards like with Citi, AMEX, and Barclays. There's some lucrative sign-on bonuses there. AA and Delta cards among others.

Edit: Also, are you putting down $0 income as an M4? Or do you have income or counting spousal income (which you can do)? You might be in purgatory as far as getting approved for new credit.

The other option is to convert an existing cc to another within the same lender, but the BoA 3% card is pretty nice.

 

[Stroganoff]

Personally I feel like 3 credit cards for a single person is the max anyone should have.

I have 13 personal cards and 1 business card at the moment. Total limits just south of $300K. I spend so little relative to that limit that my utilization ratio across individual cards remains low, and the total utilization ratio doesn't exceed 1%, which helps sustain high FICO'08 credit scores in the 800s. (They'll be higher once I pay off more student loans as well as get a mortgage.) I'm completely on auto-pilot mode credit-wise.

Credit Wh**** (CWs) in forums like flyertalk, fatwallet (defunct), creditboards are known to have 30, 40 cards and easily half a million, $1M, $2M in total limits.

It certainly raised my eyebrows when I first got into it, but it's no big deal now. "Higher limits beget higher limits" meaning it's a virtuous cycle being trusted with lots of available credit. And then more banks compete for your business and you start off with high limits to begin with.

It's just a game for those willing to play it. To each their own. I like cash back credit card rewards and don't like leaving money on the table. All of my spending problems are mostly a thing of the past, thankfully, but I completely understand that tending to a flock of credit cards isn't for those with money management or spending problems.