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Best one card utilization ratio

Moderator Emeritus

Best one card utilization ratio

Okay here's the scenario:  I just got a 2% cash back card, the interest rate is 0% for a year.  Even though I know overall utilization should not exceed 30%, nor should you utilize one card to 90% (max out), how high can the utilization be on one card if the overall utilization remains at 30% or less?
I simply use the card for every day purchases and business expenses while sticking the cash in a MMF with a 5% return.  I just don't want the balance on the one card to get high enough to ding my score.

Message Edited by Brammy on 03-26-2007 05:41 PM
Regular Contributor

You still get penalized for high util on one card. Person...

You still get penalized for high util on one card. Personally, I wouldn't put it more than 35-40%. 45% if it wouldn't otherwise report a limit.
Moderator Emeritus

Yes I know that having a high balance on one card will tr...

Yes I know that having a high balance on one card will trigger a negative just wondering if someone can tell me what that ratio is.  I would like o put as much on the card as possible while earning interest and still getting the 2% cash back bonus.
New Contributor

Since know one knows how the scores are calculated, I thi...

Since know one knows how the scores are calculated, I think you should choose the option that works out best for you! Why pay more money that you have to? I just got my credit score and in the report, they said it was bad that I used 19% of available credit. 19%!!! I don't know what they expect. They give you cedit, and if you use it they throw a hissy fit.
I just made some drastic steps to try to build up my credit, but I refuse to jump through all those **bleep** hoops and pay more money than i have to. All I'm going to do is pay my bills ontime every month. I have two credit cards with annual fees. After a year, I'm going to try get them to stop charging the annual fees. If they don't, I'll simply get better cards and close those, even if it "dents" my score.
The credit score is supposed to be a measure of how well you handle debt, and I'm pretty sure lessening your debt is a good way of handling debt.
Moderator Emeritus

Let me restate the question.  We all know utilization sho...

Let me restate the question.  We all know utilization should not be over 30% across the board.  We also know that you should NEVER Max out a card. (BTW FICO will always give you a reason and if you're down to 19% utlization being a reason you need to look somewhere elseto improve your score). 
When you are attempting to make your credit work for you, and not the other way aroundm there are variouos way to take advantage of this.  IE you have a 0% for 12 mos with 2% cash back.  You can make the card work for you in one of two ways, you can take atransfer check as long as there is no BT fee (that would defeat the purpose) set it aside in an interest bearing money market account at 5% and make money off someone else's money.
You can use the card for your daily purchases (which is me at about 1k a month) make a larger payment to the card you are revolving balance on with the higher interest rate (1.99% prersently and tax deductible)  and get a 2% discount about 240.00/year in savings seeing that there will be no balance due at the end of the 0%. period.
Again, the question is, in order to maximize your return, and yes I do look at the majotiry of my credit card activity as investments not short term loans, how high can the balance be on one card if you keep overall utilization below 30%. my current utilization is right at 10%.
I also have 5 other cards all at 0 balance by next reporting date.  Can some one answer this question? Not jumping through hoops just look at my cards a little differently than most. Right now the cost of all purchases are going to a MMF account earniong 5% while I pay 0 on the card.

Message Edited by Brammy on 03-31-2007 08:36 PM

Message Edited by Brammy on 03-31-2007 08:38 PM

Message Edited by Brammy on 03-31-2007 08:43 PM
Regular Contributor

There's no concrete number of maximum utilization. Differ...

There's no concrete number of maximum utilization. Different issues get less comfortable at different points.

If you want to bt some money from a card at 0% to a deposit account and just make your 5-6% on it, this is perfectly safe, but using a large portion of your credit lines will reduce your score. Although remember that a score is just a means to accomplish other things you want, not the ultimate goal in itself.

On misc. thoughts, don't forget to leave room for bt transfer fees when thinking how much to transfer. Don't forget to make on time payments (not only will this have negative impact on your score, but I'll leave to you to figure out what happens when you have say 50k or more at 30% interest rate because you were late on a payment).

There's plenty of useful reading on this subject on fatwallet finance forum. Just search for app-o-ramas.

Moderator Emeritus

That's the thing this card has a BT fee otherwise I would...

That's the thing this card has a BT fee otherwise I would have taken BT checks and just writteno ne to myself to depositinto my MMF.  SO right now its just monthly purchases, pay the min plus five or ten and stick the cash into the MMF.  Just don't want to take a hit on my score that would cause ratejacking by another issuer or a limit to be lowered though I only have one card that practices UD and the balance on that one is 0.
Regular Contributor

Generally you should be safe under 50-80% util on the car...

Generally you should be safe under 50-80% util on the card in that respect. The other thing though is that if someone does take adverse action it's because now you're "higher risk" per se. Generally if you contact htem an offer to show evidence that you have more than enough liquid assets to cover that, they should not worry that much. Granted of course if you want this trouble or not is your choice.
Also, do read fine print well. Payments get applied to lower apr's first, and depending on the card the 0% may only be for purchases, or bt's, etc. Thus, generally (although not necessarily in all cases), using a card for a BT and day-to-day usage is a bad idea.
With regards to the fee, for most issues you should be able to negotiative a cap if they don't already have one (and even 3% with say a $75 cap isn't that big of a deal on a sufficiently large transfer). Of course YMMV.

I agree with you on closing cards you don't need

   I am going to close credit cards that I don't need or use, keeping my older cards open.  Basically all of the cards I recently opened the passed year will be closed.  Keeping these cards opened are hurting me because of the fact that with nothing on them, I am getting a negative reports from both True Credit and Myfico saying that I h ave too much revolving lines of credit.  When its all done and over with, I will have by January 2008 just these following cards and loans.
1. Mortgage loan
2. Providian Visa (12,000 credit limit)
3. B of A MC ($16,500 credit limit)
4. B of A Line of credit (22,500 credit limit)
5. Direct Merchants MC (my oldest credit card) ($5,000 credit limit only because its a subprime card)
6. Car loan (3,000 balance)
7. Chevron Charge Card (2,000 credit limit)
I will have all of the balances at or below the 30% UTI with two of them with 0 balances. Keeping this mix and with these cards with outstanding payment history these past 8 years should keep me well in the 700 club by January 2008.
If that doesn't work, then I won't give a hoot because I will still have the aging of the cards to still get me to my 720+ goal and the peace of mind knowing that I did the right thing for me to handle my credit responsibly.

Message Edited by antredd67 on 04-02-2007 06:00 PM