0% APR and Utilization Ratio

All about Discover & Diners Club - talk about their credit card deals such as the More, Miles, Escape, and others.
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DaPuertorican
 
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Joined: Tue Sep 30, 2014 8:27 am
Location: Houston, TX

0% APR and Utilization Ratio

Postby DaPuertorican » Tue Sep 30, 2014 8:59 am

[color="rgb(139, 0, 0)"]Greetings & salutations,

I just received my first credit card (It for Students) which came with a 6-month long 0% APR promotional offer. I've done some research on optimizing how to improve my credit and I stumbled upon utilization ratio, and I want to know if my idea that takes advantage of the 0% APR would be ill-advised.

Since my CL is only $500, I was informed that my minimum monthly payments would be $35. In efforts to optimize my credit, I want to maintain a 1-10% utilization ratio. Would it be wise to leave a balance of $1-50 at the end of every billing cycle (after making the minimum $35) so long as I'm not being charged interest for those first six months?

For what it's worth, I asked a CSR when it is that they report to the credit bureaus and she said it was a couple of days before the end of the billing cycle (which ends the 2nd of every month).

I would also like to know this in terms of the future once my 6-month promotional offer expires. Since I was not given a specific date in which they report to the credit bureaus, do I have to wait until the very last minute of the billing cycle to pay off my balance to make sure "a couple of days before" is met with a 1-10% utilization ratio and I then pay in full so I am not charged interest for that month?

Thank you

Side question: if the minimum payment is $35, what happens when I only charge $20 that month?[/color]


takeshi
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Postby takeshi » Tue Sep 30, 2014 2:50 pm

Wise in what regard? You don't have to carry a balance to have one report. Would carrying $1-50 really be of any benefit to you? If you really want to carry a balance you can go up to 30%. With a $500 limit you won't be able to do much trying to keep your balance at 10% or less. I'd suggest deciding whether you're carrying a balance to take advantage of the intro offer or optimizing utilization versus trying to do both at once.

Minimum monthly payment isn't based on your limit. Discover should disclose how minimum payments are calculated.

DaPuertorican wrote:I would also like to know this in terms of the future once my 6-month promotional offer expires

Terms of your intro offer will state when it expires. Make sure your balance is 0 prior to the end.

DaPuertorican wrote:Side question: if the minimum payment is $35, what happens when I only charge $20 that month?

Your balance would increase by $20. Not sure how the minimum payment is relevant as it doesn't indicate what your existing balance would have been. Don't fixate on the minimum payment.

DaPuertorican
 
Posts: 2
Joined: Tue Sep 30, 2014 8:27 am
Location: Houston, TX

Postby DaPuertorican » Wed Oct 01, 2014 10:42 am

takeshi wrote:Would carrying $1-50 really be of any benefit to you?


I should have referrenced where I was pulling this value from. You can see the chart here.


takeshi wrote:Your balance would increase by $20. Not sure how the minimum payment is relevant as it doesn't indicate what your existing balance would have been. Don't fixate on the minimum payment.


I was unsure of what exactly a minimum payment for a credit card was, so I assumed it was the minimum amount of money required to put towards your balance during any given cycle so long as your balance > $0. In the case of the $20 balance, it wouldn't make much sense to have to pay a minimum amount greater than my current balance, so I was curious as to how that works.

Thanks, takeshi!



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