Here are 4 ways you can keep your utilization rate at a maximum of 30% of your credit card limit:
- Transfer Debt
- Pay Down Existing Balances
- Increase Your Limits
- Open Another Card
- You can distribute your debt among all your credit cards, so that the balance on all of them is below 30% of your credit card limit. If you are married, you can also transfer some of this debt to your spouse’s name with their permission (assuming you are not sharing the credit card).
Paying Your Balances
- If you can, pay your debt down to 30% of your credit card limit. If you are not able to do so, try to find other ways to pay a little more on your credit card bills each month.
Increasing Your Limits
- You can ask your credit card companies to increase your credit card limits as a means of automatically lowering your utilization rate. If you choose to do this, please be responsible, as this can create additional problems. If you are having a hard time controlling your spending, DO NOT increase your limits.
Opening Another Card
- You might be able to open another card and transfer balances from other cards to obtain a 30% utilization rate. If you do this, make sure to open the card and wait until you know the limit of the new card before you transfer the balance. Do not transfer the entirety of your balance while opening the account. Waiting until you know the limit of the new card will enable you to calculate the proper utilization rate.
Before attempting any of the steps, you should take time to assess your current situation and be very careful about how you tackle any of the options. If you are unsure about what to do, take time to schedule a consultation today.