How Much Is Too Much?
There’s debate about whether using 20% of your available credit is too high or too low. Keeping too high of a balance on your card can, of course, adversely affect your credit score. Some insist that that “acceptable number” is as high as 30%, others as low as 10%. The truth is, a 20% balance is a good, consistent ceiling for your credit limit. Meaning that if you have a $5,000 limit, carrying a balance of no more than $1000 month to month is a good way to ensure your credit score stays safe and high. Any ongoing balance over 20% is generally considered too high by banks and can adversely affect your credit score.
Lower Is ALWAYS Better
There is a bit of superstition and misinformation around whether it’s “better” to keep a small balance of some specific amount on your credit card—it’s not. If you can pay your balance in full, or get it below 10% every month, then do that. That will save you money in interest payments while still allowing you to build your credit. One simple way to maintain a low balance is to calculate one or more monthly bills to be automatically deducted from your card to equal 10% of your usage. So if you have a $2000 limit, you can keep your cards on file for $200 worth of monthly expenses—your cell phone company and Netflix subscription might do it! Pay that off every month and save yourself some worry.