BoA Better Balance Rewards card.

[Anonymous]

So does anyone have this card? From my understanding, I could spend 30$ a month on it, wait until the statement period is done and then pay in full before the due date and essentially make 100$ per year? Seems too good to be true. The only negative I can think of is a slightly higher utilization but 30$ is like .1% utilization for me. Is this card too good to be true??

[Iorek]

Yup, that's how the card works. If you open up a savings account and throw $300 in there (just enought to avoid monthly charges), you get another $5/quarter => $20/year. 

It will be another trade line that posts a balance, which may interfere with FICO scoring. That's about the only negative.

[Anonymous]

please explain what happens to a Fico Score when a tradeline reports a balance? If I pay the balance in full after it posts won't I be okay?

[Iorek]

The optimal amount of tradelines to have a balance I believe is 1-2. Quoting from the FICO website, "A larger number of accounts with amounts owed can indicate higher risk of over-extension."

Since your credit report is just a snapshot of a point in time, if a balance is reported for a month that's that. If you pay it off immediately after, it won't be reflected until the next time that card reports. For the BBR to work, you have to have a minimum payment to pay each month, so you have to have a balance reporting each month. It does not have to be the same balance - so you don't need to revolve balances. Because of this, you will always have a balance reporting on that card (unless you decide to forsake the rewards for that quarter).

[Anonymous]

I have 4 cash rewards cards that each have small balances each month (under 500$) but I pay in full on everything. I've never not payed in full, ever. Am I doing credit wrong? For example, my statement period for Dec1-Dec 31has a minimum payment due by Januanry 25. I plan on paying in full anywhere from Jan 1-Jan 10 (way before its due). I do this with 4 credit cards. Is that bad?

[Iorek]

Yes, you should only be letting 1-2 card report a balance. For the others, pay them in full BEFORE the statement closes. You won't lose out on anything by doing this. In your example case, pay in full before Dec 31.

Note that it's not the end of the world if you let all your cards report a balance (as long as you're paying them off before interest starts). Your credit report will just be weaker than it otherwise would.

[Anonymous]

Ok, I appreciate the information. I can't imagine letting several cards report a balance as long as you pay in full is too detrimental to your credit score. Do you know what percent it is? (I.e. making payments on time is 35%) 

[Iorek]

Not sure of the exact percentage, but according to http://www.myfico.com/crediteducation/amounts-owed.aspx it falls under the Amounts Owed section, which is 30%. You might find that it's stated as a reason for denial of new credit. Depending on your credit limits, having several balances may be pushing your total utilization above 10%.

[stevenngu92]

fwiw i had a few months where i would only buy gum on the card so my statement balance was $1-3. i payed a couple cents over the full amount and received the bonus. I think paying in full would be okay too, but i would just be safe and pay a cent over the balance.