question about 0% apr

[Anonymous]

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@Anonymous wrote:

what would be considered a fairly low balance with a credit limit of $1500?

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Under $135 (9% of the limit)

[medicgrrl]

Is there a large purchase you're wanting to make? Maybe if you tell us what you're wanting to do, you can receive more specific advice on how to make your payments. It's ok to use it for the purpose it's for...credit, you just want to be smart about how to do it so you don't end up carrying a balance for, say, groceries or every day needs.

[Anonymous]

Yes, I plan on buying some upgrades for my laptop. A hard drive, new ram etc. The total cost is going to be $554 and im looking to split the payments up over time. Every other charge i make on the credit card i plan on paying off the same day by paying it with my debit card ie. groceries, phone bill, cable bill, light bill, etc

[Shooting-For-800]

If you are not going to apply for new cards, your untilization rate does not matter (under say 75%).

Your rates changes every month, so as long as your ult rate is low when you apply for your next card, you will be fine.

[medicgrrl]

Ok so it sounds like you're going to be making large payments every month (groceries, bills etc) plus an additional amount to pay down the laptop upgrades. Your reported balance will be about 30% and going down monthly. You should be fine with that because of your plan to PIF all the other charges every month. Make your payment before the statement cuts so it won't show a large amount on your credit report. Make a second payment by the due date so you're not late with your payment.

[CreditInspired]

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@Anonymous wrote:

so your saying even within the 15 moth 0% apr period try to not go above a balance of $120 at the end of the billing cycle / due date?

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Just to reiterate Djo. You can spend as much as your CL as you want as long as BEFORE statement cuts, the balance is paid down to <9%.

[rmduhon]

medicgrrl is right. Fairly low isn't a set number. Generally speaking, it's an amount that can be paid quickly if necessary, which will be different for everyone.

[rmduhon]

The under 9% isn't necessary unless you plan on applying for more credit, because that will optimize your scores. If not then you don't have to worry so much about it.

[HeavenOhio]

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@ChessChik47 wrote:
Congrats on your approval!  Be careful to make sure that less than 10% of the limit is being reported from month to month since this is the only card you have.  You want to make sure your utilization isn't too high.  As an example:  If your limit is $1000 don't let more than $99 report each month.   

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Using the example, make that $89. Less than 10% is correct. But 9-point-whatever rounds up to 10. So the key would be to be at 8.9% or below.

Djo247, 29% (28.9% or below) is considered responsible borrowing. 9% (8.9% or below) optimizes scoring. There's no problem charging the $534, but I'd try to get the balance down to $430 (a little under 28.9% of your limit) before the statement cuts. With Chase, the statement cuts about three days after the due date. If this is your first cycle and nothing's due yet, call and ask when the statement cuts.

After your purchase, as others have said, pay substantially over the minimum. Make sure you're taking a bite out of your big purchase, and pay any other miscellaneous charges in full.

When it comes time to apply for new credit, at that point you'll want your balance to be at 8.9% of the limit or lower ($133).

[Anonymous]

There are conflicting answers here, especially for someone who isn't credit-experienced yet.

In your case, if it was me, I would go ahead and buy whatever I needed that I knew I could pay off in 11.5 months.  I'd take the total of the purchase and divide it by 11, then make that payment every month PLUS anything else I put on the card. 

I'd put every possible thing through the card that I would otherwise pay cash for - groceries, gas, light bill, cell phone bill, whatever - and then pay those amounts at the end of each week or on each payday, using the cash.  While some of them may end up reporting, you'll get into the habit of paying regularly on your credit card account, and this is probably more valuable long-term than a few points in utilization scoring.  Once you are more familiar with and comfortable with credit and how it works, you can start to apply more complex techniques for managing reporting to your advantage when you need to.

I would NOT worry too much about my utilization in yoru situation, since the only thing on the account long-term will be the large purchase being paid off over time.

Micromanaging utilization only matters if and when you are preparing to apply for new credit (card, loan, etc.)

While you're in the building phase, you will generally have higher utilization generally, since your available credit will be very small.  Once you've worked your way into three or four cards, utilization will easier to manage.  I'm not saying just max out every account you get, but your plan on making a large purchase and paying it off over time while there is no interest on it makes absolute sense, regardless of the utilization issue.  After all, no interest translates into real money left in your pocket, which is the ultimate goal of any credit usage - to minimize the cost of borrowing money.