How much of my credit limit should I be spending each month?

[Baggravation]

I asked this question a while back and people were telling me that the general rule of thumb was to try to spend no more than 20% per month. Well I kinda blew that this month and I've spend close to 70%. How bad does that look? :/ I have my credit card connected to my debit so that at the end of the month; the bank pulls the maximum amount of my debit. I figured that I might as well use my credit card since I make cash back on it.

The question I suppose would be if I should continue to use my credit card or if I should not exceed the 20% rule regardless of the cash back? I know I will never approach a point when I don't have money in my debit - I'm far too careful for that to ever occur. Also, when we last chatted, I reduced my limit to $500 a month as opposed to $1000, so I don't think it's anything ridiculous. I typically only spend a maximum of $100 a month (usually my phone bill and random purchases) and then I use my debit however, I thought using my debit defeated the purchased of the cash back (especially on groceries and what not where I make 2%).

All thoughts would be appreciated. This is my first credit card and I'm trying to build a credit score (as many of you told me that it's quite important to do so).

Thank you very much, friends!

[MortgageQueen]

For maximum credit score, use no more than 65% of your credit limit and NEVER be late for a payment.

[Brooke_]

I have never heard of this "Use x% of your credit limit" however, I'm going to look into it. If it IS true, then I'd suggest upping your limit so that it balances to the % you want to be using! Use your card! You get rewards with it

[Baggravation]

Thanks you guys
My limit was $1000 but since this is my 1st card, the limit scared me so I asked them to bring it down to $500.
I don't want to bring it up considering I kinda lost control this month! :$

[tjthemanto]

Thanks you guys
My limit was $1000 but since this is my 1st card, the limit scared me so I asked them to bring it down to $500.
I don't want to bring it up considering I kinda lost control this month! :$

When the bill comes , pay it in FULL ..not just minimum payments or half the bill or something. That way you will pay no interest.

.I think you are doing that anyways , since your bank is automatically deducting the payment. make sure the bank is paying of the entire amt. and not just a part of it , as the bank has a vested interest in you not paying the full bill , so that they can charge you interest on the balance and make money on it.

Never miss a payment...and Never exceed your limit , there will be penalty charges for going over or if the payment gets declined , it won't look good.

You do all the above things and you should be fine and will have a great credit history.

[Baggravation]

When the bill comes , pay it in FULL ..not just minimum payments or half the bill or something. That way you will pay no interest.

.I think you are doing that anyways , since your bank is automatically deducting the payment. make sure the bank is paying of the entire amt. and not just a part of it , as the bank has a vested interest in you not paying the full bill , so that they can charge you interest on the balance and make money on it.

Never miss a payment...and Never exceed your limit , there will be penalty charges for going over or if the payment gets declined , it won't look good.

You do all the above things and you should be fine and will have a great credit history.

Thanks a bunch! How can you go over your limit? Won't it just decline your card? :/

[MortgageQueen]

Thanks a bunch! How can you go over your limit? Won't it just decline your card? :/

No, you can go over your limit (although not by alot) That REALLY affects your credit. . . negatively.
If you have trouble staying within your personal spending limits, leave your card in your drawer at home

[Baggravation]

No, you can go over your limit (although not by alot) That REALLY affects your credit. . . negatively.
If you have trouble staying within your personal spending limits, leave your card in your drawer at home

My gosh :/ I never knew. Credit cards are scary things!

[colinbreid]

Keep in mind that there are 2 credit rating companies in Canada. With Trans Union it is 50% of your available limit, with Equifax it use to be 75% (that according to its old website, this number is absent from its new web site).

One of the advantages of having a higher limit is that it makes it more difficult for you to reach the danger point. With a $500 limit, you need only spend $250 to reach the 50% point, but with a $1000 limit that $250 represents just 25% of your limit.

Also keep in mind that anytime that you think that you may be reaching the 50% point that you should make a payment to your credit card to reduce your balance. You do not need to wait until you get your statement to make a payment. For instance, charging $100 a week on a card with a $500 limit and making a payment of $100 a week means that you will only ever use 20% of your available limit, versus charging $100 a week and accumulating a monthly balance of $400 means that you have used 80% of your available limit. In this case, even should you pay off the $400 in full at the end of the month your credit report will be negatively affected.

[Baggravation]

Keep in mind that there are 2 credit rating companies in Canada. With Trans Union it is 50% of your available limit, with Equifax it use to be 75% (that according to its old website, this number is absent from its new web site).

One of the advantages of having a higher limit is that it makes it more difficult for you to reach the danger point. With a $500 limit, you need only spend $250 to reach the 50% point, but with a $1000 limit that $250 represents just 25% of your limit.

Also keep in mind that anytime that you think that you may be reaching the 50% point that you should make a payment to your credit card to reduce your balance. You do not need to wait until you get your statement to make a payment. For instance, charging $100 a week on a card with a $500 limit and making a payment of $100 a week means that you will only ever use 20% of your available limit, versus charging $100 a week and accumulating a monthly balance of $400 means that you have used 80% of your available limit. In this case, even should you pay off the $400 in full at the end of the month your credit report will be negatively affected.

Oh I feel so gosh darn stupid LOL. I didn't know you could pay ahead of time :/ Seems like common sense but I always thought I would have to wait until the end of the month. I'm starting to feel better about this whole credit card thing Thank you very much!

[tjthemanto]

My gosh :/ I never knew. Credit cards are scary things!

Not really ..it won't go over by much.

Its kind of like the overdraft protection you have on your bank account .

[tjthemanto]

Oh I feel so gosh darn stupid LOL. I didn't know you could pay ahead of time :/ Seems like common sense but I always thought I would have to wait until the end of the month. I'm starting to feel better about this whole credit card thing Thank you very much!

Yes you can .

But most people wait till they get the bill and also use the 21 Days grace period , so that they can get interest free money for almost 45-50 days .

As long as you pay in full before the payment due date you will be fine otherwise they will charge you interest right from day one

[Shwa Girl]

A trick a customer once told me - use credit cards so you come out the winner and not the credit card company. The idea that "since you get rewards using the card may as well do it", is a clever marketing strategy.

The customer used the credit card for groceries. But she always had the cash for the groceries in the bank. She paid with the grocery store credit card, got the points and went to the in store bank machine and paid off that day's credit card purchase right away. That way she leaves with nothing owing, but gets the points.

[brunt]

Oh I feel so gosh darn stupid LOL. I didn't know you could pay ahead of time :/ Seems like common sense but I always thought I would have to wait until the end of the month. I'm starting to feel better about this whole credit card thing Thank you very much!

It was always funny. When I worked in Toronto, I would pay our credit card bill at the bank at work so that we didn't need to make a special trip to the bank (we lived waaaaay out in the country at the time).

Anyways, just to make the cheque writing simple, we would always round up the bill, since we constantly were using the card for my commutes. Well, you should have seen the looks on the tellers' faces when confronted with payments greater than the bill. A couple of times they had to pull over a supervisor since they had never seen it done before.

One cautionary note on cards with points - don't double count the value of the points. For instance, if you happen to use the Canadian Tire Credit Card (my personal favourite), don't tell yourself that you saved $0.03 per litre off your gas purchase, then with the accumulated money, buy yourself something at Canadian Tire and tell yourself that it is "free". You either get a discount on your gas and use the points to purchase something you would have bought anyway, or you paid full price for gas and got yourself a nice present with the points. Not both.

[Baggravation]

It was always funny. When I worked in Toronto, I would pay our credit card bill at the bank at work so that we didn't need to make a special trip to the bank (we lived waaaaay out in the country at the time).

Anyways, just to make the cheque writing simple, we would always round up the bill, since we constantly were using the card for my commutes. Well, you should have seen the looks on the tellers' faces when confronted with payments greater than the bill. A couple of times they had to pull over a supervisor since they had never seen it done before.

One cautionary note on cards with points - don't double count the value of the points. For instance, if you happen to use the Canadian Tire Credit Card (my personal favourite), don't tell yourself that you saved $0.03 per litre off your gas purchase, then with the accumulated money, buy yourself something at Canadian Tire and tell yourself that it is "free". You either get a discount on your gas and use the points to purchase something you would have bought anyway, or you paid full price for gas and got yourself a nice present with the points. Not both.

Does the extra money just carry over to the next month? Are you telling me that you have a balance of $0 on your card and you just add money to it, for example, $100, because you know that you'll end up spending that much on commuting in the coming month? I just went to my bank and paid off my bill ahead of time :D WOOHOO. I'm going to do that all of the time now because the bank is so close. No more stress for me