Charge Card Utilization

[wngraham]

Until now I’ve never had a charge card, but have always been diligent about keeping my monthly utilization below 10%, both overall and on an individual card basis.

I’ve got roughly $57k in available credit, and spend around $2k a month, so nowhere near 10%. However, my highest limit card is $20k, so I spread that spending out over 2 or 3 different cards to make sure I’m not even close to 10% on any one of them.

Now that I’ve got an AmEx Platinum, I’m curious how the utilization counts with it. Can I move all my spending to it since it effectively has no listed limit, so the utilization is 0%, and I’ll still be well under 10% overall?

Hope this question makes sense.

[Meanmchine]

IIRC, charge cards do not count towards utilization. Could be wrong on this tho

[Adkins]

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@Meanmchine wrote:

IIRC, charge cards do not count towards utilization. Could be wrong on this tho

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You are correct. I regularly put $1-2K a month through my Amex Gold, and it reports the full balance to the CRAs. Each CRA says the balance is NOT included in my utilization. 

[Anonymous]

^^^ correct. I run about the same through my Gold. It does not influence utilization percentages but it will figure into total debt.

[HeavenOhio]

Charge cards count toward utilization in the Experian 98 (FICO 2) family of scores. The card's highest balance is used in lieu of a limit. Newer scoring models ignore charge card balances for utilization purposes. However, the card still counts toward total balances and number of accounts with balances.

The Experian 98 FICO scores include the classic score used for mortgages. If there's a time that this score is important to you, you might want to keep a lid on your charge card balances.

[SouthJamaica]

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@wngraham wrote:
Until now I’ve never had a charge card, but have always been diligent about keeping my monthly utilization below 10%, both overall and on an individual card basis.

I’ve got roughly $57k in available credit, and spend around $2k a month, so nowhere near 10%. However, my highest limit card is $20k, so I spread that spending out over 2 or 3 different cards to make sure I’m not even close to 10% on any one of them.

Now that I’ve got an AmEx Platinum, I’m curious how the utilization counts with it. Can I move all my spending to it since it effectively has no listed limit, so the utilization is 0%, and I’ll still be well under 10% overall?

Hope this question makes sense.

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It's not counted in percentage dollar utilization at all, except with one of the mortgage scores (I forget which one).

It does count as an "account with a balance" in the accounts-with-balances metric.

[Anonymous]

OP, do you carry balances or PIF? If you PIF then util shouldn't even matter as it's getting paid monthly. Right?

So if all spend is on a Charge Card, and no other CC balances are present. Then util would not even be affected?

I see this question come up often, but I generally associate it with people who carry balances from month to month. 

[SouthJamaica]

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@Anonymous wrote:

OP, do you carry balances or PIF? If you PIF then util shouldn't even matter as it's getting paid monthly. Right?

So if all spend is on a Charge Card, and no other CC balances are present. Then util would not even be affected?

I see this question come up often, but I generally associate it with people who carry balances from month to month. 

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That's not true at all @Anonymous Paying in full after the statement cuts doesn't have any effect at all on "utilization" with credit card accounts.

[wngraham]

I always pay in full, but that doesn’t effect utilization at all. Once the statement is cut the amount due is reported. So whether I pay all of it the very next day or (and I would never do this) drag it out paying minimum payments for a year, that statement amount that particular month doesn’t change.

[HeavenOhio]

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@Anonymous wrote:

So if all spend is on a Charge Card, and no other CC balances are present. Then util would not even be affected?

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If your only positive balance is on a charge card, you need to be concerned about the "all cards at zero" penalty kicking in across at least some of your scores.