Keeping cards at a zero balance

[NC84]

Will keeping a few credit cards at zero balances effect me in any away? I plan on using one for most of my purchases but not the others.  Thanks 

[Anonymous]

Hey NC84,

I think it depends.

When you say at zero balances, do you mean never charging anything at all to them? If so, you don't get the bonus of on-time payments (there won't be any), and other payment history information. You will get the CL to include in your UTI and also the AAoA.

What I am doing with my DW's unused cards, to generate a statement/payment is setting up our Netflix/Hulu/XBOX, etc memberships to hit those cards, and enabling auto-pay on all of the cards. This way I don't have to worry about spend/payments/etc, but she gets all of the benefits of having the accounts open.

Also, any cards that will grant CLIs with SPs are worth trying to increase after a few months to help with overall UTI.

Best of luck!

[NC84]

Excellent idea. Thanks!  

[Anonymous]

You're welcome!

[NC84]

Would an e-z pass toll linked to a card suffice? 

[dursty87]

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@NC84 wrote:

Would an e-z pass toll linked to a card suffice? 

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It would.  But I think the point the other poster was making was that if you set it up with Netflix/Hulu the same amount will be charged monthly in which you set up autopay to pay that exact amount which will keep the balance reporting at "0" while still showing usage.

If you use a card and link it to a toll device, the amount will vary based on how many tolls you actually use.  Don't get me wrong, I do this with a card but you will have to monitor the monthly charges and be sure to pay it before statement cut if you don't want it reporting a balance.

[Anonymous]

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@dursty87 wrote:

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@NC84 wrote:

Would an e-z pass toll linked to a card suffice? 

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It would.  But I think the point the other poster was making was that if you set it up with Netflix/Hulu the same amount will be charged monthly in which you set up autopay to pay that exact amount which will keep the balance reporting at "0" while still showing usage.

If you use a card and link it to a toll device, the amount will vary based on how many tolls you actually use.  Don't get me wrong, I do this with a card but you will have to monitor the monthly charges and be sure to pay it before statement cut if you don't want it reporting a balance.

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^Exactly. It makes it to where you basically can forget about the card, but still have activity (statement cut) to get all benefits of the card.

[NC84]

Gotcha.. Thanks 

[Anonymous]

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@NC84 wrote:

Gotcha.. Thanks 

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You're welcome. It's just a good way to not incur additional spend, just to generate a statement on a non-reward based card. But I love the payment history, etc.

If it's a store card, this obviously won't work.

[Aahz]

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@Anonymous wrote:

When you say at zero balances, do you mean never charging anything at all to them? If so, you don't get the bonus of on-time payments (there won't be any), and other payment history information. You will get the CL to include in your UTI and also the AAoA.

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This isn't entirely accurate.  The vast majority of cards report to the credit bureaus even if there is no activity.  The CL is figured into your utility for every card regardless of whether there is activity on it or it reports in any given month - once it reports the CL is used for the calculation until it's reported as closed.  The same is true for AAoA - as long as the TL is on the report it's calculated in.

Additionally, one does not get a bonus for on-time payments - one receives a penalty for late payments.  The points one seems to receive from extended periods of on-time payments come from other scoring categories - utility, AAoA, number of tradelines, etc.

The reason to not ignore a card entirely is to keep the issuer from closing it for inactivity.  One charge every 3 to 6 months usually suffices for this purpose.