HOUSTON – For many consumers, it's easy to swipe your credit card when making a big purchase.
However, increasing your credit card utilization rate can have a negative effect to your credit score.
A new report from CompareCards.com says Houston has the 5th highest rate at 32.7%.
Trevor Shakiba, private wealth advisor with Ameriprise Financial, shares his top financial tips when it comes to lowering your utilization rate.
Every dollar counts, to pay off those balances. - Trevor Shakiba
What’s your credit card utilization rate and why does it matter?
- First, what exactly is a credit card utilization rate?
- It’s the comparison of your balance to your available credit
- $3k in credit card debt with a $10k limit = 30% utilization rate
- The lower the better
- Your utilization rate is the 2 nd most important factor in determining your credit score
- Only your payment history is more important
- Houston has the 5 th highest rate at 32.7%
- Houston also has an average credit card balance of over $5,500
- So, what can you do to improve this? Pay down the balances!
- This goes without saying!
- Experts say to keep your rate below 30%
- I recommend keeping it at 0%
- Do anything and everything to eliminate high interest credit card debt!
- High interest debt is THE biggest impediment to building wealth
- Increase your credit limit!
- Caution! Be careful here not to simply charge more!!!
- 64% of cardholders who asked for a higher limit received one
- Average increase was more than $2,000
- Add another card to your wallet!
- As above, make sure you don’t go on a spending spree!
- It’s all about the Math.
- Lower balances on all of your cards equals a lower utilization rate
- Take advantage of 0% introductory offers as well!