What should I keep my credit card balance at?

Asked by: Dora Lebsack II  |  Last update: February 4, 2025
Score: 4.3/5 (62 votes)

According to the Consumer Financial Protection Bureau (CFPB), experts recommend keeping your credit utilization below 30% of your total available credit. Here's an example: Say someone has only one credit card. And it has a $1,000 balance and a $4,000 credit limit. In that case, the utilization ratio is 25%.

How much balance should I keep on my credit card?

To maintain a healthy credit score, it's important to keep your credit utilization rate (CUR) low. The general rule of thumb has been that you don't want your CUR to exceed 30%, but increasingly financial experts are recommending that you don't want to go above 10% if you really want an excellent credit score.

What is a good credit card balance to keep?

A general rule of thumb is to keep your credit utilization ratio below 30%. And if you really want to be an overachiever, aim for 10%. According to Experian, people who keep their credit utilization under 10% for each of their cards also tend to have exceptional credit scores (a FICO® Score of 800 or higher).

Should I keep a 10% balance on my credit card?

Comments Section It doesn't really matter. Using a ton of the limit will hurt your credit score but that has a very short memory. What's more important is to maximize rewards and especially to never pay a dime of interest by paying the balance in full before it is due every single month.

What is the 2/3/4 rule for credit cards?

According to cardholder reports, Bank of America uses a 2/3/4 rule: You can only be approved for two new cards within a 30-day period, three cards within a 12-month period and four cards within a 24-month period. This rule applies only to Bank of America credit cards, though, and not all credit cards.

How to Use Credit Cards Wisely | The 6 Golden Rules

18 related questions found

What is the golden rule of credit card use?

The golden rule of Credit Cards is simple: pay your full balance on time, every time. This Credit Card payment rule helps you avoid interest charges, late fees, and potential damage to your credit score.

Is it bad to have a lot of credit cards with zero balance?

Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.

How much credit card balance is too high?

Today our question is, “How much debt is too much debt?” And really, at Consolidated Credit, we think any amount of debt is too much. But ideally you should never spend more than 10% of your take-home pay towards credit card debt.

Is having zero credit utilization bad?

It can reflect badly on your score if you consistently (more than three months) have a utilization rate of zero percent because you've opened cards and aren't using them at all. That indicates to credit reporting agencies that you're not using your credit limits at all rather than using them responsibly.

Is it better to leave a small balance on a credit card?

The key is to keep your balance at or below 30 percent of your credit limit to help improve and maintain a good credit score, which means having no balance at all is even more helpful. Always try to pay off your credit card in full when possible.

Is a 900 credit score possible?

What is the highest credit score possible? To start off: No, it's not possible to have a 900 credit score in the United States. In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U.S. have a maximum of 850.

Is it better to have a low balance or no balance?

The lower your balances, the better your score. Carefully consider how you want to use your available credit based on your goals and your personal situation. Keep in mind, however, that the best way to maintain a high credit score and lower your financial risk is to pay your balances in full and on time, every time.

What habit lowers your credit score?

Late or missed payments can cause your credit score to decline. The impact can vary depending on your credit score — the higher your score, the more likely you are to see a steep drop.

What happens if I use 90% of my credit card?

Helps keep Credit UtiliSation Ratio Low: If you have one single card and use 90% of the credit limit, it will naturally bring down the credit utilization score. However, if you have more than one card and use just 50% of the credit limit, it will help maintain a good utilization ratio that is ideal.

What is the ideal balance to carry on a credit card?

According to the Consumer Financial Protection Bureau (CFPB), experts recommend keeping your credit utilization below 30% of your total available credit. Here's an example: Say someone has only one credit card. And it has a $1,000 balance and a $4,000 credit limit. In that case, the utilization ratio is 25%.

Does keeping a balance hurt credit score?

Despite what some people mistakenly believe, carrying a balance doesn't help your score — it can actually hurt it. When you carry a balance from month to month on your credit cards, costly interest charges can cause your debt to balloon faster than you may expect.

How to get 800 credit score?

Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.

What is the average credit score?

The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.

Is there anything you shouldn't use a credit card for?

Down payment, cash advances or balance transfers

A good rule to abide by is to not rely on a credit card for any kind of down payment. It will add to a larger cost and may be a sign that you shouldn't make the purchase. In addition, cash advances usually charge a higher rate than purchases.

Is it bad to overpay my credit card balance?

Key takeaways. Overpaying your credit card bill is a common mistake that usually has no negative affect on your credit card account. If you've overpaid by a significant amount, however, then the action can trigger a fraud warning with your issuer.

What is healthy credit card debt?

Bonepath also advised keeping total household debts below 36% of income, with no more than around 10% to 15% of this allocated to credit card debt. Any more than this amount and you'd likely find it challenging to meet today's needs and save for tomorrow.

Is it better to cancel unused credit cards or keep them?

If you pay off all your credit card accounts (not just the one you're canceling) to $0 before canceling your card, you can avoid a decrease in your credit score. Typically, leaving your credit card accounts open is the best option, even if you're not using them.

Do credit card companies like when you pay in full?

While the term "deadbeat" generally carries a negative connotation, when it comes to the credit card industry, it's a compliment. Card issuers refer to customers as deadbeats if they pay off their balance in full each month, avoiding interest charges and fees on their accounts.

What is a good credit score?

There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.