Question : How much is too much when it comes to reaching your credit limit?
I know that credit card companies don't want you to come to close to your limit when using your credit card. How much of your credit limit should you use? For example, if you have a $5,000.00 credit limit, how much of that is enough?
- asked by russell h
All Answers:
Answer #1
You should never use over 30% of your limit whichin your example would be $1,500.00.Even better isto pay your cards off in full every month that wayyou never pay interest.
- answered by SPIFIMAN1
Answer #2
Actually, you are asking three different questionshere. First, the credit card companies want youto come as close to your limit as you can withoutgoing over...that increases the amount of financecharges and increases their profit. From aconsumer perspective, you want to have absolutelyno balance that carries from one month to another,which avoids that finance charge. From theperspective of applying for additional credit suchas a mortgage, the company you are applying towould like to see something in the order of 1/3 ofthe limit or less, which shows them that you canhandle credit responsibly. Obviously, there areexceptions (purchase of a major item such as afreezer or other appliances might push you overthe 50% mark which can be explained and mitigatedby not charging more) and when applying forcredit, this should be mentioned.
- answered by Steve D
Answer #3
I think one should make allowance for Interest andOther Charges when considering how much of yourallowed credit is enough. If you do not, shouldyou go over your limit even as a result of thesecharges, you will still be penalized (additionalcharges) for spending over your limit. I think 90%of your limit is just enough
- answered by kalakuta
Answer #4
i loved economics in class and talking to most ofthe teachers and other people they all told me thesame thing when dealing with your credit limit themost you should spend on it is about 40% so inyour case $2000 an more than that and yourinterest will start to go up
- answered by james
Answer #5
It isn't how much of your limit you use, it's thebalances you carry. If you max out your card butpay the balance in full every month, the creditcard company will probably increase yourlimit.Carrying balances of more than 30% hurtsyour score. Pay off the balance and your scorerebounds. Instead of worrying about how much youcan put on the card, worry about only chargingwhat you can afford to pay in full every monht. Just because you have a $5K limit, doesn't meanyou have to use a certain amount.
- answered by bdancer222
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