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Started By
Message
Carrying around 30% balance on credit card.
Posted on 3/8/17 at 12:48 pm
Posted on 3/8/17 at 12:48 pm
This is probably a stupid question, but I would rather ask a stupid question and be sure than not.
I have seen this discussed some in here recently and wanted to get a little clarification.
We have always tried to pay any credit card balance off when the bill comes in. But then I read here and a cpl other places that it's better to keep around 30% of your limit in the card.
Does this mean to pay off your balance, except for 30% when the bill comes in and carry that over, and then at the end of each billing cycle just pay it down to the same 30% again each month?
Does it help your credit that much to carry the 30% over from month to month?
Am I not understanding what it is I'm supposed to be doing here.
I know there are worse mistakes I could make other than paying the credit card balance off each month, but after reading about this I wanted to make sure I understand completely and that it's actually worth doing it this way.
Thanks.
I have seen this discussed some in here recently and wanted to get a little clarification.
We have always tried to pay any credit card balance off when the bill comes in. But then I read here and a cpl other places that it's better to keep around 30% of your limit in the card.
Does this mean to pay off your balance, except for 30% when the bill comes in and carry that over, and then at the end of each billing cycle just pay it down to the same 30% again each month?
Does it help your credit that much to carry the 30% over from month to month?
Am I not understanding what it is I'm supposed to be doing here.
I know there are worse mistakes I could make other than paying the credit card balance off each month, but after reading about this I wanted to make sure I understand completely and that it's actually worth doing it this way.
Thanks.
5
Posted on 3/8/17 at 12:58 pm to Titus Pullo
Just pay what is owed.
The 30% figure is that your credit score is hurt if you are utilizing over 30% of the credit extended to you. IE When your statements cut, you owe $4,000 on all your cards but you only have $10,000 in total available credit on them.
Just pay them off and not worry about all that.
The 30% figure is that your credit score is hurt if you are utilizing over 30% of the credit extended to you. IE When your statements cut, you owe $4,000 on all your cards but you only have $10,000 in total available credit on them.
Just pay them off and not worry about all that.
Posted on 3/8/17 at 12:59 pm to Titus Pullo
You should pay off the entire balance each month. I.e. you should not be paying interest on any of your purchases.
30% that people talk about is the utilization amount.
Probably better to provide an example.
$10k credit limit on a card.
Ex A: You spend $5k in the month and your statement closes. Your utilization for the month is 50%. You pay the entire balance and don't owe any interest.
Ex B: you spend $5k for the month. You pay down $2k before your statement closes. When your statement closes you have a $3k balance that is reported to the credit agencies and that is a 30% utilization. You pay the $3k balance off normally in full and you have no interest owed.
30% that people talk about is the utilization amount.
Probably better to provide an example.
$10k credit limit on a card.
Ex A: You spend $5k in the month and your statement closes. Your utilization for the month is 50%. You pay the entire balance and don't owe any interest.
Ex B: you spend $5k for the month. You pay down $2k before your statement closes. When your statement closes you have a $3k balance that is reported to the credit agencies and that is a 30% utilization. You pay the $3k balance off normally in full and you have no interest owed.
Posted on 3/8/17 at 1:03 pm to Titus Pullo
IMO as long as you're not applying for something major like a mortgage it doesn't matter as long as you're paying off your statement balance every month.
Posted on 3/8/17 at 1:08 pm to Titus Pullo
quote:
Does it help your credit that much to carry the 30% over from month to month?
As others have said it doesn't help, but on the flip side it doesn't hurt either, as long as your overall utilization isn't too high. I don't advise this unless you have a promotional APR or 0-2%
Posted on 3/8/17 at 1:08 pm to Puffoluffagus
Fwiw, different credit score algorithms take into account utilization differently. I've never personally never focused on the utilization or made it a priority. As long as you aren't using 80% of your utilization every month. And I don't think it's a big deal to be below the 30% utilization every month. I mean if you have high credit limits your utilization is likely going to be lower as a result anyway.
Posted on 3/8/17 at 1:17 pm to Teddy Ruxpin
quote:
Just pay what is owed.
Yeah this sounds like the best way for me to go.
Thanks for all the replies.
Posted on 3/8/17 at 2:03 pm to Titus Pullo
When I was getting my mortgage I was 19 pts short of the band I was trying to get in
I had 6 cards, 3 had balances <5% , 1 had a balance of 20-25%. I paid all cards to $0 so that they all reported as $0
My score jumped up 28 points. My mortgage broker was shocked at he refused to believe I could have made that type of jump given my low balances
The "carry a balance" argument for CC is outdated. Back in the day, many CC companies would not report $0 balances as it cost them money to do so. Your card would then show as "inactive" or "not updated" , keep the last balance reported as your credit utilization AND you wouldn't get score bonus of increasing credit score age.
Today, almost every major CC issuer reports monthly regardless of activity. A 0% utilization is a good thing
A negative on my original report was legit
I had 6 cards, 3 had balances <5% , 1 had a balance of 20-25%. I paid all cards to $0 so that they all reported as $0
My score jumped up 28 points. My mortgage broker was shocked at he refused to believe I could have made that type of jump given my low balances
The "carry a balance" argument for CC is outdated. Back in the day, many CC companies would not report $0 balances as it cost them money to do so. Your card would then show as "inactive" or "not updated" , keep the last balance reported as your credit utilization AND you wouldn't get score bonus of increasing credit score age.
Today, almost every major CC issuer reports monthly regardless of activity. A 0% utilization is a good thing
A negative on my original report was legit
quote:
Too many revolving credit accounts with non zero balance
This post was edited on 3/8/17 at 2:10 pm
Posted on 3/8/17 at 2:29 pm to Puffoluffagus
quote:
You should pay off the entire balance each month. I.e. you should not be paying interest on any of your purchases.
You can pay off entire balance or pay the "Statement balance" which is the balance that carries over from previous statement period that wasn't included in that month. I always do this and you don't pay any interest, instead of paying full balance.
Posted on 3/8/17 at 2:54 pm to Titus Pullo
capital one has an app called creditwise. it has a scenario calculator in it to show what might happen if you pay off or get a new loan etc.
not 1000% accurate but interesting to see implications of each piece on your credit report.
They use Transunion (the worst of the three bureaus)
not 1000% accurate but interesting to see implications of each piece on your credit report.
They use Transunion (the worst of the three bureaus)
Posted on 3/8/17 at 3:39 pm to AUtigerNOLA
quote:
You can pay off entire balance or pay the "Statement balance" which is the balance that carries over from previous statement period that wasn't included in that month. I always do this and you don't pay any interest, instead of paying full balance.
I'm new to CC's and I was figuring this would be the way to do it. Thanks
Posted on 3/8/17 at 3:41 pm to Old Money
i pay my card weekly
sometimes its the full amount or 85-90 percent of the balance
sometimes its the full amount or 85-90 percent of the balance
Posted on 3/9/17 at 12:24 am to LSUvegasbombed
quote:
i pay my card weekly
Seriously? Why?
I've been paying the monthly bills as they come due for many years w/o incurring a penny of interest. Why would you send them money sooner than you had to?
Posted on 3/9/17 at 11:20 am to Twenty 49
i use to use my debit card for paying every day things.
Now I just my credit card to get the points. I think its piece of mind to pay my balance week to week.
Does it hurt me that bad to do it this way?
Now I just my credit card to get the points. I think its piece of mind to pay my balance week to week.
Does it hurt me that bad to do it this way?
Posted on 3/9/17 at 12:25 pm to Twenty 49
quote:
Seriously? Why?
I've done it when I just want to know exactly how much money I'll have on a certain date with out having to do math because math sucks.
I like to keep my checking account lean, so from time to time for projection purposes when I need to build up cash in it I want to know how much of it is truly "extra."
But I know that is all purely preference on my part. Pay it now, pay it later, I don't really GAF.
This post was edited on 3/9/17 at 12:26 pm
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