When figuring out what percentage of utilization an account will report, remember to allow sufficient extra dollars for the monthly interest unless the entire preceding month's statement was paid in full so that there won't be a finance charge on the upcoming statement.
If you can pay a bit more, remember that you don't want to be AT say 30%, for example, instead you want to go down to LESS THAN 30%.
A quick calculation:
Multiply the reported credit limit (or, remember about CapOne or signature/world type cards which don't report their credit limits -- then it's the HC high credit figure) by 28%.
That will usually get you a figure which will keep the new statement below 30%.
How much to allow for the upcoming finance charge? A rough calculation without involving the details of average daily balance et cetera is to multiply the HIGHEST amount which that account rode up to at any time during the billing month times the APR, then divide by 12.
Example: Bob's account ABC has a CL of 3000 and its APR is 24.25%. The daily amount owing rose from the starting balance of $1100 which had carried over from the previous month to $1560 when Bob bought a loveseat.
A payment of $500 was made 10 days ago, thereby bringing down the amount owing now to $1060.
How much of a second payment during this billing cycle would it take in order to be sure that the next statement amount would be less than 30% utilization?
28% of $3000 = $840. 29% of $3000 = $870. The figure Bob will aim for is in the neighborhood of $850-$865 but definitely not to be as high as $900 which would be 30%.
Calculating the finance charge (sure, this will come out a bit to the high side but better safe than sorry when it's for just a few bucks) is $1560 times .2425 divided by 12 months. $1560 times .2425 = $378.30.
However, Bob doesn't need to allow for the whole year's finance charge now, only for one month of that. $378.30 divided by 12 = $31.53.
Bob's account could bill at as much as $1091.53 if he doesn't make a second payment.
If Bob wants the bill to be at less than 30% utilization, he could pay another $225 to $250 now to bring it down to 28% or 29% before it bills again.
What if this account doesn't report its statement amount but instead like Orchard or Union Plus it reports the end-of-month balance?
Bob would figure it out using the same steps but the amount owing which he will work from is whatever amount will be owing on the last day of the calendar month.
Is there an annual fee or any other fee or more new purchases which will appear on this bill? If so, Bob will want to allow for those extra dollars as well.
