Utilisation rate - HELP

ywlgy
ywlgy Posts: 146 Forumite
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in Credit cards
Hi all,

I recently applied for my first credit card. I have a question now about utilisation rate after reading some articles.

Some suggest utilisation rate should not be over 30%. Is it true?

I only have £250 limit with Aqua. My intention is to increase my limit asap. My current utilisation rate is 50.5%. Should I pay before statement come out to reduce it below 30%? Or should i keep it high so that Aqua would consider increasing my limit?

Thanks

Comments

  • AndyPix
    AndyPix Posts: 4,847 Forumite
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    ywlgy wrote: »
    My intention is to increase my limit asap.


    Sounding desperate for a big limit on a high APR card ..


    This is unlikely to end well
  • MallyGirl
    MallyGirl Posts: 6,617 Senior Ambassador
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    don't pay before the statement or it will look like you are not using the card. With such a low limit I would not worry about utilisation. Just keep using the card and paying in full to build up some good behaviour history.
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
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  • Kim_13
    Kim_13 Posts: 2,421 Forumite
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    I always thought it was 50%, so I'd say you're fine as you are. If you do decide to make a part payment, check the terms of your agreement as with some cards, the payment would affect the DD being taken (as the minimum would presumably have already been paid) and then interest would end up being charged if part of the statement balance hadn't been cleared.

    As Mallygirl has said, utilisation tends to be given more of an emphasis with higher limits.

    I don't have an Aqua card so I can't add any personal experience unfortunately.
  • Kim_13
    Kim_13 Posts: 2,421 Forumite
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    AndyPix wrote: »
    Sounding desperate for a big limit on a high APR card ..


    This is unlikely to end well

    Not necessarily, though of course I'd agree if the OP is wanting a bigger limit so as to carry a balance.

    I have a card with a £500 limit and could easily go over a £250 limit (as you essentially have two months' spending on the card just before the Direct Debit goes out.)

    A higher limit makes the card easier to manage, as you don't have to worry so much about every penny that goes on it (or worry about how part payments work with your provider if you want to clear a bit to continue spending on the card.) That itself comes with a lead time of a few days before the credit is available to spend again.
  • ywlgy
    ywlgy Posts: 146 Forumite
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    AndyPix wrote: »
    Sounding desperate for a big limit on a high APR card ..


    This is unlikely to end well
    no, technically i don't need any credit because i am a saving person. I just want to build my credit history for future possible mortgage. A large limit means i can have protection when buying expensive things and rent cars abroad.
  • AndyPix
    AndyPix Posts: 4,847 Forumite
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    ywlgy wrote: »
    no, technically i don't need any credit because i am a saving person. I just want to build my credit history for future possible mortgage. A large limit means i can have protection when buying expensive things and rent cars abroad.




    Fair point - well made :)
  • Dobbibill
    Dobbibill Posts: 4,135 Ambassador
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    OP - 30% - 40% is sometimes recommended as a safe amount to use given the timing between usage in one month and DD taken the following month.

    Paying it off too soon can seem as though it's not being used - DDs going out via DD on the due date build a consistent history of using/repaying/repeating.

    As the due date is generally around 3 weeks after the statement, usage in month 2 will push your utilisation up to approx 60% - 70% meaning it's still not maxed up the limit so doesn't look at though you are using every penny of credit available.

    Running it at 50% per month leaves very little wiggle room for errors.
    I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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