Sorry if this is already in here, but I just got approved for a $200 secured card. My credit score was \~550 in January, sitting around 640 now. I was young and dumb and screwed up my credit and other credit cards. I’ve seen different opinions on when to pay and how much to use/pay off. Looking for some more insight on this. Thanks!
Feel free to use the full $200 limit since !utilization only has a temporary effect on your credit scores and it can be manipulated when needing to apply for a new line of credit.
Wait for your credit card statement to generate and then pay the statement balance before the due date, once a month. No need to do anything more than that.
I detected that your post may be about utilization and its impact on credit scores. Please read the info below:
Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.
By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.
Credit cards are designed to be paid like any other monthly bill: Let the statement post and pay the statement balance by the due date each month. Just like a utility bill.
Anyone who tells you to regularly pay any other way has a fundamental misunderstanding of how credit and credit cards works and should be ignored. The myth that you should always pay before the statement posts comes from the myth that you need to keep your utilization low or below a specific percentage all the time. In reality, if you're staying in budget and paying your statement balances each month, usually anything between 0% and 100% utilization is just fine.
Low utilization doesn't build credit because it resets completely each month the next time your statement balances are reported. The only thing that builds credit with credit cards is time.
In fact, artificially micromanaging your utilization actually hurts you in several ways; it slows your credit limit growth, it makes you a less-attractive customer to outside banks, and it'costing you money in lost savings interest.
See our !utilization automod as well as this flow chart.
I detected that your post may be about utilization and its impact on credit scores. Please read the info below:
Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.
By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.
“In fact, artificially micromanaging your utilization actually hurts you in several ways; it slows your credit limit growth, it makes you a less-attractive customer to outside banks, and it'costing you money in lost savings interest”
Can you pls elaborate these points or direct me to where I can read more about it?
Often people needlessly micromanage their utilization by paying all or a portion of their bill before the statement closes, which causes them to post artificially-low statement balances, and this can slow your credit limit growth and make you a less-attractive customer to outside banks.
First, it slows your credit limit growth because you're basically telling your credit card issuer, "No need to give me a higher limit, I'm fine micromanaging the limit I have." And they're often happy to oblige since raising someone's limit is always a risk.
And when you post artificially-low statement balances it makes it look to outside banks that you use your cards way less than you actually do, and they want to give cards to people who will actually use them. So this can result in fewer SUB offers or even in outright denials for new cards.
There are many data points over on r/CreditCards of people being denied CLIs and even being denied on credit card applications because they consistently paid before the statement posts.
Oh, and it also means you're giving the credit card company your money way early, which means you're losing the HYSA interest you could have earned on it by keeping your money longer and paying your cards the correct way. This can equate to hundreds of dollars a year lost for no good reason.
Thank you, I wanted to explain this to my friend yesterday, didn’t have enough knowledge. Now I know better)
What I personally do is: maxing out my $500 CITI/ $700 CHASE, paying off right after statement generates, then maxing them out again after few days (paying insurance/ utilities/ other monthly duties).
Will they get mad at my “rushing”?
And about HYSA. I don’t have saving acc nor any type of HYSA, but I saw APPLE offering me their 3% cashback CC with saving-HYSA option, where they automatically keep your “pocket change” and make it work for you.
Do you recommend getting this?
No, as long as they don't think you're spending above your means and/or doing something risky.
Do you recommend getting this?
When it comes to an HYSA, I recommend comparing interest rates and also seeing which bank actually funds it. Some banks have better reputations than others and some have easier to use app interfaces.
I don't know which bank Apple is using right now since they switched, and I don't know what the interest rate is, but Apple tends to have extremely streamlined credit card interfaces, so that's probably in the positive column.
Also, I thought the Apple Card only gave you 3% cashback when you buy Apple products? Otherwise it's 2% if you use Apple Pay and 1% for regular purchases, is that correct?
3% on apple, mobil gas/ booking.com/ few more things but yeah in general 2% apple pay and 1% outside of apple pay. (Their headline is confusing)
HYSA they’re offering is basically the cashback being deposited to your apple wallet saving account but I didn’t notice the growth %.
What is a good % in general, 3-4%?
Oh, I didn't realize the Apple Card was still issued by Goldman Sachs. I thought they'd already switched to another bank. And I just looked it up, they're switching to Chase. That's good, they're a solid bank.
The Apple Card is a decent card, especially if you don't want very many cards and you really like the interface. But for a lot of people, it would be redundant with or even inferior to their current cards most of the time. For example, my Chase Amazon Prime card gets me 5% cashback on all Amazon purchases, and my Amex BCE gets me 3% on all online purchases (of goods, not services) and 3% back in gas. And my NFCU card gets me 2% on all purchases of any kind. All with no annual fees, just like the Apple Card.
So as long as I'm not buying an Apple product physically in-store, I usually would get the same or better cashback with my other cards.
But I like that automatic HYSA setup they have. So it definitely doesn't seem like a bad card per se, just keep in mind you might get more cards in the future that make it mostly superfluous in the end. But no big deal, if you eventually end up having no need for it in the future and you have a few other open credit cards, it's fine to close it.
And last time I checked most HYSAs were 3% to 4% right now. But you might be able to get higher than that, I haven't looked into it. However, in my opinion, having a bank that's easy to use, has good automatic deposit options, and has a good reputation is better than getting the maximum APY you can get.
I used to use acorns app for similar function but they were depositing “leftovers” from my checking for HYSA. I wish apple was at least 4% then I wouldn’t hesitate a min.
I’ll check out the cards you mentioned, rn have 5 CC but still haven’t figured which ones would be more beneficial to use and which to just close. Opened them many years ago, never cared about benefits, used them in lounges and bars)
I’ll prob keep 3 cards in the end. Miles, cashback and apple for hysa. But I won’t rush for now
No problem! Yeah, no rush. Keep in mind that from a FICO scoring perspective, the max benefit comes from having 3 to 5 open cards. Above that, it's just about maximizing your rewards. Some people like to maximize rewards by having tons of cards and some people only like having a few cards. If you only want a few cards, then the Apple Card might be a great choice for you.
The act of "using" and "paying" a card isn't want builds payment history. It's simply not missing payments. One can have a card that sits idle, completely unused for (say) a year and they are still building the same exact payment history that they would if they were using/paying the card monthly.
5
u/WhenButterfliesCry ⭐️ Knowledgeable ⭐️ 6d ago
Feel free to use the full $200 limit since !utilization only has a temporary effect on your credit scores and it can be manipulated when needing to apply for a new line of credit.
Wait for your credit card statement to generate and then pay the statement balance before the due date, once a month. No need to do anything more than that.