Utilization Clarification

[Anonymous]

From reading these forums, I understand that I want to aim for < 10% utilization, although I have heard others say that 1-3% is best. In any case, this means that I have to pay each credit card account twice/month, right? 91% before the statement date and then the rest of it before the due date otherwise I will have to pay interest on the money. Is this correct?

For those of you who have 10-20 credit cards, how do you keep track of all these? I'd like to automate everything and I've looked at the Quicken software, but it can just pay off all the credit cards before the due date or can make the minimum payment or a set amount each month. I have not seen a software program where I can specify to pay off 91% of a balance each month. Appreciate any responses,

Goal800

[haulingthescoreup]

No, what you want is overall <10% util. Don't go crazy trying to make each and every card report <10% every month, because you're right, that involves paying each of them twice.

Since you have so many cards, you might want to separate them into different categories. * Generally * you can get away with using a purely store card (no Visa/ MC/ etc logo) once every 5-6 months. Bank cards need to be used more often to avoid closure for non-use, every 3 months or so. HSBC is much worse --recently many have found that they need to be used monthly or be prepared to wave bye-bye. So divide up your bank cards (this includes credit union cards) into those that you mainly want to use, such as rewards cards, and those that you just want to hang on to for util, etc. Of the ones that you mainly use, let 2 or 3 of them report a balance each month, and then PIF them well before the due date. The others can get used during their biling cycle --a tank of gas, a bag of groceries, an online purchase --and then PIF them before the statement date so that they don't report.

In this manner, you'll keep all your cards active by usage, which makes the banks happy, but you'll only let a few report a token balance, which makes your FICO scores happy.

And you don't have to play this util game if you don't want to. You can just use the cards that make sense to you for usage, wait til the statement posts, and them pay them in full. But you'll probably find that you get more points by restricting the number of accounts that report balances. Hope that clarifies things a bit!

[laz98]

i only have 8 cards, but i don't use all of them all the time, so it's pretty easy to keep track of them.  i use an excel spreadsheet.

[Anonymous]

I keep ours on Excel, too.  Works great.  I actually keep it right with the budget.

[DI]

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@Anonymous wrote:

From reading these forums, I understand that I want to aim for < 10% utilization, although I have heard others say that 1-3% is best. In any case, this means that I have to pay each credit card account twice/month, right? 91% before the statement date and then the rest of it before the due date otherwise I will have to pay interest on the money. Is this correct?

For those of you who have 10-20 credit cards, how do you keep track of all these? I'd like to automate everything and I've looked at the Quicken software, but it can just pay off all the credit cards before the due date or can make the minimum payment or a set amount each month. I have not seen a software program where I can specify to pay off 91% of a balance each month. Appreciate any responses,

Goal800

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I have 11 cards.  The due date for all, but one,  is on the 4th of each month.  I keep all total purchases under $300 for the month to ensure I can PIF.  I do not trust automation.  I like going down my list as I pay each card myself.  I cannot give the banks a chance to say AHA...gotcha!  

Also, all the cards I have are not used evey month.  I have occasionally though.  I have began a lottery process with my cards.  One has to win who get used for the month.  

Message Edited by DI on 11-08-2009 06:14 PM

[haulingthescoreup]

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DI wrote:

...Also, all the cards I have are not used evey month.  I have occasionally though.  I have began a lottery process with my cards.  One has to win who get used for the month.  

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The card-of-the-month club! It's like your kids calling shotgun on the front seat.

I used to do the two-cards-of-the-month club. Same difference, I just rotated through more quickly.

I have half of mine due on the 1st - 5th, and the other half due on the 16th - 22nd. Matches my paycheck nicely.

[Anonymous]

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haulingthescoreup wrote:  It's like your kids calling shotgun on the front seat.

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I have SO been there! 

The cool thing is that, unlike kids, credit cards are disposable. 

There are a few that are golden keepers, but some that you can let go of when they no longer fit your needs.  Just pared DH's cards down - lost the Orchard at 10 months (it accomplished its rebuilding work) and lost the Macy's (Gasp!) -- still an infant, but didn't fill a need.  Keeps life simpler and even keeps FICO happy.  Some cards we hope to keep forever.  But not all.  (My Walmart card's starting to look a little panicky and probably thinking the stinky sock drawer wouldn't be so bad after all).

Now, if it were just that easy to pack the kids (and grandkids) in the car!

ETA:  Okay, so maybe SOME kids ARE disposable!!!!  No, no, no.  Just kidding.

Message Edited by beamMEup on 11-08-2009 08:31 PM

[Anonymous]

So let's say I add up all the credit limits on each card and it totals to $18,000. 10% of this is $1,800, so this means that on the reporting date, I want to have no more than $1800 balance on all of my cards?

I would still need to pay off 1-2 cards twice/month because I'll need to pay off this $1800 before the due date right? This is a lot simpler than keeping track of 10 cards.

Thanks for all the suggestions regarding Excel... I was going to buy some sophisticated software but I may as well change all statements to e-mail and keep track of them all in in a spreadsheet program.

Message Edited by Goal800 on 11-22-2009 07:19 PM

[Anonymous]

For clarity:

Optimal credit utilization for FICO scoring purposes is:

• Total revolving utilization > 0 and <= 9%, the lower the better, and
• Reporting a balance on less than half of your revolving TL's, and
• Reporting a balance on half or less of all TL's.

Anyway you get there is fair game. You only need have one revolving TL report a balance.