As we close out the year, it's time for our annual predictions on what to expect from credit cards and rewards in 2025.
Is 30% credit card utilization the magic number?
02.12.2024 - 19:43 / thepointsguy.com
As a credit card rewards enthusiast, you already know that keeping your credit score in great shape is important. Good credit is essential if you want to keep yourself in a position to qualify for the best credit card offers when they become available.
Keeping a close eye on your credit card utilization ratio is one strategy you can use to maintain a good credit score. Credit utilization — or the relationship between your credit card balances and limits — is an important factor in your score. In fact, 30% of your FICO Score is largely (though not entirely) based on your credit card balance-to-limit details.
A lower percentage is generally better in this area. However, there is some debate about what the perfect credit utilization ratio looks like.
Many financial experts recommend keeping your utilization rate below 30% if you want to earn optimal credit scores, but there may be more to the credit utilization story. Here's what you need to know.
Related: How to check your credit score for free
Credit utilization describes the percentage of your credit card limits that are in use. Let's say you have a single credit card with a $10,000 credit limit. If the balance on your account is $5,000, your utilization rate is 50%. In other words, you are using (or utilizing) 50% of your credit limit.
Credit scoring models, such as FICO and VantageScore, look at credit utilization in two ways when calculating your credit score:
With both measurements above, it's not the real-time balance on your credit cards that matters. Rather, credit scoring models base your credit utilization rates on the balance and limit details that appear on your credit report. Card issuers usually update that information once a month — around the time they issue your monthly statement.
Related: How credit scores work
In short, no. A Google search about "credit utilization" or "revolving utilization" produces dozens of articles suggesting that you should keep your credit utilization ratio at or under 30% to optimize your credit scores. However, this isn't necessarily the case.
Indeed, lower credit utilization rates are generally better for your credit score, but staying under the 30% utilization threshold might not be enough to boost your score.
Can Arkali, senior director of scores and predictive analytics with FICO, confirmed that using a low percentage of your available credit can have a positive impact on your FICO score. However, Arkali added that "there is nothing 'optimal or significant' about 30% credit card utilization."
But generally speaking, FICO scoring models consider a 30% credit card utilization rate less risky than a 50% utilization percentage. As a result, you'd likely see a 30% utilization rate lead to a better score
The website maxtravelz.com is an aggregator of news from open sources. The source is indicated at the beginning and at the end of the announcement. You can send a complaint on the news if you find it unreliable.
Top Autors
Popular Topics
insider.com
19.12.2024 / 10:35
I went to a Chase Sapphire airport lounge and couldn't believe I could get in for free without the travel credit card
A Chase Sapphire airport lounge opened in January at New York City's LaGuardia Airport and John F. Kennedy International Airport. There are also Chase Sapphire lounges in Boston and Hong Kong.
thepointsguy.com
17.12.2024 / 15:39
Our 2024 credit card predictions and trends: What did we get right and wrong?
At the start of 2024, we made 10 predictions on credit card trends that we expected to see this year. Among them were higher fees, lower interest rates and superior technology.
travelandleisure.com
17.12.2024 / 00:27
Alaska Airlines Will Launch a New Credit Card Next Year — Here Are All the Perks It'll Come With
A new Alaska Airlines premium credit card with enhanced perks and greater opportunities to earn bonus miles is coming next summer.
euronews.com
16.12.2024 / 15:21
Romania and Bulgaria will be in the Schengen zone from January. What will change for travellers?
As of 1 January 2025, Romania and Bulgaria will officially become full-time members of the Schengen Area, which allows free movement between member states for 450 million citizens.
insider.com
15.12.2024 / 12:49
I spent 6 months traveling around Europe. The experience was great, but a few simple things would've made the trip even better.
As an American, exploring countries like France, the UK, the Netherlands, and the Czech Republic for six months was an absolute dream.
thepointsguy.com
14.12.2024 / 20:03
Waldorf Astoria’s New York City revival is just the beginning for Hilton’s planned luxe 2025
"Will it or won't it reopen?" hotel cynics have been wondering about Waldorf Astoria New York for years. (Not me, of course. I'm an eternal optimist who always thought it was coming back. Cough.) But now, the Waldorf Astoria New York finally has a clear path to reopening day.
travelandleisure.com
13.12.2024 / 20:45
This Luxury Tour Group Just Launched 2 Around-the-world Private Jet Trips — Here Are the Details
A new gift idea for the traveler who has it all just landed. Luxury tour operator Abercrombie & Kent recently unveiled two new private jet itineraries for 2026, and updated two existing ones. The programs will take travelers on curated journeys to off-the-grid, or hard to reach destinations. The firm operates the month-long excursions in February, May, September, and October and they sweep through multiple counties and destinations around the world on a private jet.
insider.com
11.12.2024 / 11:15
Frontier Airlines Credit Card Review 2024: Pros and Cons
Affiliate links for the products on this page are from partners that compensate us and terms apply to offers listed (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate credit cards to write unbiased product reviews.
cntraveler.com
10.12.2024 / 23:11
The Most Searched Destinations of 2024, According to Google
The annual Google Year in Search was just released, chronicling the major sports, news, and pop culture trends of 2024. With over 8.5 billion searches per day, Google is privy to heaps of data on what people are looking for on the internet—including the top trending travel destinations of 2024.
matadornetwork.com
10.12.2024 / 21:45
These Cruise Lines Are the Only Ones to Let You Snorkel and Dive in Antarctica
While Antarctica is remote, it’s hardly inaccessible any longer, even for tourists. Well over 15 cruise lines travel to the seventh continent during the Antarctic summer, and while restrictions apply, many of them even land on Antarctica. The cruise lines that are allowed to organize landing activities go all out in what they offer their passengers: polar plunges in the icy waters of the Southern Ocean, kayaking and SUPing sessions around icebergs, camping on the ice, penguin-viewing hikes, and Zodiac rides in search of wildlife. While both Scenic Cruises and Seabourn offer submarine excursions during their sailings to the seventh continent, only two operators give their passengers the chance to have the ultimate adventure: snorkel and dive in Antarctica.
thepointsguy.com
10.12.2024 / 13:27
Alaska Airlines makeover: Asia flights coming to Seattle hub, premium credit card and more
The integration of Alaska Airlines and Hawaiian Airlines has officially commenced, and with it comes some serious changes to how the two carriers have historically operated.