Using 30% of Your Credit

Today's SpecialsSo, I’ve read in numerous places online that it’s ideal to use only 30% of your credit limit. In other words, if your credit card has a $10,000 limit, you should only have $3,000 on that card. (I like easy numbers. Obvs.)

I wanted to look at where we stood on that front, because in the next couple of months, I’m seriously looking into a new credit card that we would only use for groceries and gas. (The American Express Blue Cash Preferred Card, specifically!) We spend $450 on groceries monthly and around $350 – $400 on gas (my husband has an hour-long commute… one way). This AmEx card gives you 6% cash back on groceries and 3% back on gas! WHAT WHAT. That’d be amazing. (I’ve never had an AmEx card, though, before. Is it normal to be nervous before “dating” a new card?)

In any case, I’d like to be in the best financial shape possible without waiting forever to apply for it.

So, without further ado, here’s our numbers (as of the middle of February 2014):

Chase Card 1:

  • Total Credit Limit: $7,500
  • Credit Being Used: $510
  • Percentage: 6.8%

Chase Card 2: 

  • Total Credit Limit: $9,000
  • Credit Being Used: $8
  • Percentage: .08%

Citibank Card:

  • Total Credit Limit: $9,000
  • Credit Being Used: $3197
  • Percentage: 35.5%

Total Credit Limit: $25,500

Total Credit Being Used: $3715

Total Percentage: 14.6%

I don’t know how our car loan would factor in, or our mortgage, but this is looking good!

I’m tempted to go for it right now, but I’d really like to be more mentally prepared to take on a new card. Once we pay off that Citibank card, we’re not going to touch that account (but will keep it open). At that point, I won’t have to worry about 3 credit cards at once. I’m also considering retiring one of the other credit cards just to keep things simple. (Again, not closing the account, but just not putting anything on it and keeping an eye out for non-use charges or some other sly way they might try to make money off of me.)

Anyone have any experience with how companies look at your entire debt when considering you for a card? Anyone have the AmEx Blue Cash Preferred card already? Any words of wisdom?

7 thoughts on “Using 30% of Your Credit

  1. Hi,

    Have you ever heard of It’s like mint, but for your credit score. The best part of it is that you don’t have to link your bank accounts for it to work. It might be ‘off’ by a few points because institutions use their own formulas, but it should give you a good idea of where you are now.

    The 30% figure you hear is the MAXIMUM amount of credit you want to utilize. Ideal is between 1% and 10%. However, the penalty between 10%-30% is somewhat minimal (so I hear.) Having different types of credit, mortgage and car, will only help your score with on time payments.

    Also keep in mind that the utilization part of your score is calculated month-to-month. It’s best to pay in full, every month, after the bill has posted. If you’re like me, and are in the habit of paying it weekly, go an entire month of not paying it off weekly (just paying it that month, and on time) before applying for more credit.

    Only apply for one credit card at a time, because they do a ‘hard’ hit on it. It dings your credit score by a few points, and is supposed to drop off 12 months later (also so I hear.)

    I went with the Barclay Sallie Mae credit card (5% on the first $250 spent on groceries a month, 5% on gas for the first $250 a month, and 5% on the first $750 bought at qualifying bookstores (I hear that amazon counts as a bookstore, I’m still making my way through gift cards from Christmas, so I haven’t tested this out yet.) The card you have your eye on is great for groceries!

    This is my first month of using the Barclay card. I’m nervous because this is only my second credit card, and the first one that’s not through my bank. I’ll be fine once I figure out how to transfer funds to it and paying it off. I figure that the information I need is in the statement. They haven’t even posted when my due date is!

    I apologize for the length of my comment. If you have any more questions, is a very active community that answers personal finance questions.


    • Your comment is full of incredibly helpful information! Yes, it seems about right that 30% would be the top of what card issuers would be looking for – that makes sense.

      Also, the information you give about waiting until after a bill has been posted before paying it in full – very interesting! We currently pay off our credit card, student loans, and car loan as automatic payments (the credit card and student loans automatically debit our accounts on the due date, and the car loan is an automatic transfer I set up), so I hope that qualifies. We are, however, snowflaking extra cash to our car loan, so I wonder how that affects our credit….

      I’m definitely going to look into creditkarma – I have heard of it somewhere, so it’s time to check it out!

      Regarding your new credit card – congrats! I find it easiest to manage our credit cards online and I set up our Chase credit cards to pay the full balance every month (which means I have to be super-vigilant about not charging more than we can cover from our bank account!). (I don’t do this for our Citibank card, which is where we’re working to pay off the large balance.)

      Thanks for the informative and super helpful comment!

      P.S. I’ve been scared of reddit because I’m totally afraid I’ll get obsessed with it and need to read it every day! I already am obsessed with my feedly RSS reader, tumblr, facebook, and twitter… but I may not be able to resist the allure of a personal finance thread! 🙂


  2. Your student loans and car loans aren’t revolving accounts, so you shouldn’t have to worry about the bill posting for those, since the percentage used of available credit only refers to revolving accounts (at least this is my understanding).

    And the requests for new cards will stay on your credit report for 24 or 25 months, but my experience was that the hard pulled only dropped my score less than 10 points, which in my case was a lot less than my score increase from having more credit available (I had been about 50% utilization at the time I opened my last new card).


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