Keeping a running balance on credit cards?

[sze5003]

My debit card number was stolen and my checking account was cleared out. My bank called to ask if I made these strange purchases and to stop my debit card from being used.

The next day I got a new debit card. It took a while but they finally replaced my money that was stolen. So I've been thinking of just using my discover cash back credit card for purchases everywhere I used to use my debit card.

Problem with this is, it leaves a running balance on the credit card. Is that good or bad? As long as I pay the statement balance in full each month I'm not charged interest. With my debit card the money came straight out the bank and I always knew how much I had left.

I don't over spend anyway because I have always used debit and only ever used credit cards if I wanted to make a big purchase and it was interest free.

Could there be any drawbacks to this? I really don't want to go broke again if someone gets hold of my card number again. It was so annoying to just sit and wait for my money to come back.

 

[highland145]

Like you said, pay it off every month. But it is an interesting question. FICO wants you to be around 30% of you credit limit but if you use it for everything, you could be way over that at any given time. That might affect your score depending on what else you have out there, debts, lines of credit etc.

Could do an online bank transfer during the month if the checking and card are with the same bank.

 

[shocksyde]

Your score is only affected by your credit utilization at the very moment the score is pulled, so just make sure you have your balances paid down 2 months in advance of any applying for mortgages, etc.

(2 months ahead of time because it can take a bit of time for the lower balances to be reported)

 

[sze5003]

Yea I meant daily purchases not bills. My weekly/monthly bills come out of my bank account anyway. I only use my debit card for gas and groceries each week, lunch or breakfast sometimes at work, and small purchases like at a store or Wal-Mart if I need to buy something quickly that I need. I'm using the discover card since it has cash back and has a high limit for me.

 

[Imp]

Log into your credit card account online to track your spending and any weird stuff. Unfortunately, I only ever had one credit card that was actually up to date to at least the hour. All my other ones are up to date in terms of the credit limit posted, but the transaction details aren't posted until a few days afterwards.

I've been keeping a negative balance on my credit cards for the past year or so...

 

[AznAnarchy99]

I lost my wallet and someone racked up thousands of dollars in purchases on my Amex. Called them and told them what happened and money was back into my account in 2 days.

My buddy lost his wallet with his debt card from Chase and they wiped his bank account clean. It's been two weeks and he still hasn't gotten his money back.

 

[sze5003]

Some of mine got closed because I never used them. Which isn't good. My discover one updates instantly. I only ever used cards for 0% interest stuff for example if I'm updating my desktop and it included a lot of new parts, or buying a large gift, paying off a medical bill and there are no interest offers. That way I just take my time paying it.

So far I've seen people just used CC instead of debit for the daily purchases. After what happened I can see why.

 

[smackababy]

Your best bet is probably to get another credit card. I only use my USAA card for purchases, but I have a couple others that I keep just for emergency. So, even if my running balance on my USAA card is maxed out, I am only at like a quarter of my total limit. Credit cards offer you the best protection, and in the event something like this happens, you won't actually be out that money and waiting to get it back like what happened to you.

 

[sze5003]

Your best bet is probably to get another credit card. I only use my USAA card for purchases, but I have a couple others that I keep just for emergency. So, even if my running balance on my USAA card is maxed out, I am only at like a quarter of my total limit. Credit cards offer you the best protection, and in the event something like this happens, you won't actually be out that money and waiting to get it back like what happened to you.

Yea I have a couple. My best one is capital one. It is at 4% apr and has been since I've owned it but the balance isn't large at all on it. It was my first card. Then I have an Amazon visa, an amex blue, citing card and well store cards which I rarely ever use like my best buy and newegg card.

 

[AznAnarchy99]

Some of mine got closed because I never used them. Which isn't good. My discover one updates instantly. I only ever used cards for 0% interest stuff for example if I'm updating my desktop and it included a lot of new parts, or buying a large gift, paying off a medical bill and there are no interest offers. That way I just take my time paying it.

So far I've seen people just used CC instead of debit for the daily purchases. After what happened I can see why.

Do they really close if you don't use them? I have a Best Buy card and some other account that I never touch since the interest is so high.

 

[smackababy]

Do they really close if you don't use them? I have a Best Buy card and some other account that I never touch since the interest is so high.

I never use my BestBuy Rewards Mastercard, but they charge me like $50 a year that gets paid off immediately. I wonder if that counts? I should probably close it.

Yea I have a couple. My best one is capital one. It is at 4% apr and has been since I've owned it but the balance isn't large at all on it. It was my first card. Then I have an Amazon visa, an amex blue, citing card and well store cards which I rarely ever use like my best buy and newegg card.

Use whichever is best for you to use. Also, be aware that your credit score isn't likely to be hugely impacted by high utilization on a single card, and even in the event you need to apply for any credit, it isn't like it comes out of nowhere. Just pay the entire balance a couple months before.

 

[sze5003]

Do they really close if you don't use them? I have a Best Buy card and some other account that I never touch since the interest is so high.

Yes my best buy and kohls card were closed since I had not used them in a year. I knew it since I went to get my siblings a tablet for Xmas last year and they had 0% interest plus some certificate as a deal so when I went to swipe my card they said it was declined. Later they told me it was closed since I had never used it.

I know my kohls one was closed because I didn't use it.

Your MasterCard for best buy, since you pay a yearly fee, won't get closed.

 

[BarkingGhostar]

Hmm, the wife and I only rarely use our CC anywhere near our available credit. We maintain no balances and both our scores are excellent. I fail to see how not using >15% of available credit or not maintaining some sort of monthly balance is supposed to be negatively impacting.

 

[RockinZ28]

Don't use my debit card for anything unless it's the only option, which is almost never. Also have 2 checking accounts with enough to cover mortgage+bills just in case one got hit. Don't want to miss a mortgage payment or something. Plenty of CC's too, seem to issue new ones fairly often due to possible security breaches, so don't want only one CC either.

Plus rewards of course. Better to get back 1.5-5% on every purchase.

Believe the credit guru forums will say 1-10% running balance of your total limit is best for your score. And a balance on less than 50% of your credit lines.

 

[smackababy]

Hmm, the wife and I only rarely use our CC anywhere near our available credit. We maintain no balances and both our scores are excellent. I fail to see how not using >15% of available credit or not maintaining some sort of monthly balance is supposed to be negatively impacting.

I think the theory is, maintaining a small balance shows you are financially responsible and you can have money made off you (interest). Companies like that.

 

[sze5003]

Luckily I had enough in savings to cover my rent and student loan payments. They cleaned out my account 3 days before rent was due. It was horrible. I've always had my debit card on me, never let anyone access it. There must have been a breach somewhere or a card reader in some location. I didn't go anywhere unusual either way.

 

[Thump553]

Exactly because of the situation OP and Aznanarchy described is the reason I absolutely never use a debit card except as an ATM card. Get two major credit cards, keep one unused except for major emergencies (use it once a year or so to keep it active). The other I use for my daily purchases and PAY IT IN FULL each and every month. Best of all if you use a credit card that gives you points or cash back. Bank of America pays me $30-50 per month for using their credit card.

I've been doing this for several decades and my credit score is over 800-without doing any special tricks. After a few years of this practice the bank will raise your credit limit sky high anyway, in my experience, so I wouldn't stress over your expenditures exceeding a percentage of your income.

Of course to do this you need an adult level of fiscal discipline.

 

[z1ggy]

Like you said, pay it off every month. But it is an interesting question. FICO wants you to be around 30% of you credit limit but if you use it for everything, you could be way over that at any given time. That might affect your score depending on what else you have out there, debts, lines of credit etc.

Could do an online bank transfer during the month if the checking and card are with the same bank.

I believe FICO only checks the debt:limit ratio once per week. So you could pay off 1/4 of the bill every week, and hopefully never go over the 30%

But OP I have personal experience with this. For about 2 years I did what you are asking...I charged 100% of everything to my CC then paid off the balance every month. What ended up happening though was slowly over time, the balance would start growing because of random expenses going up, but my income remaining the same. So after two years I'm left with like a thousand dollars of debt on top of paying it off every single month for exactly what I owed.

Essentially, if you are really really good at not buying shit (on top of normal expenses), or having some savings you can dip into to pay off extra stuff, then go for it. But if you are like me and suck at saving and find yourself buying random things that look cool, don't. Just keep using the debit card. When you have thousands of dollars at your finger tips and the mindset of ,"oh, I can pay it back eventually nbd" you can get in a little bit of trouble.

 

[smackababy]

Luckily I had enough in savings to cover my rent and student loan payments. They cleaned out my account 3 days before rent was due. It was horrible. I've always had my debit card on me, never let anyone access it. There must have been a breach somewhere or a card reader in some location. I didn't go anywhere unusual either way.

And that is why a credit card is a better option. Had this happened to your credit card, even if it took 2 weeks to refund the balance, you wouldn't actually be out any money. You are better protected in the event of something like that happening.


As for your original question: I still don't believe the ding on your credit score will be that much, unless you're limit is at the point of where you spend.

 

[Scarpozzi]

Luckily I had enough in savings to cover my rent and student loan payments. They cleaned out my account 3 days before rent was due. It was horrible. I've always had my debit card on me, never let anyone access it. There must have been a breach somewhere or a card reader in some location. I didn't go anywhere unusual either way.

I like American Express the most because they are usually really good for fraud detection and customer service if you have a problem....

It wouldn't hurt to do the Dave Ramsey thing and keep $1000 or so in an account for rainy days. I know that may be hard to swing, but it can really save you in a jam....particularly if you get stuck paying insurance deductables with little notice.

 

[sze5003]

I believe FICO only checks the debt:limit ratio once per week. So you could pay off 1/4 of the bill every week, and hopefully never go over the 30%

But OP I have personal experience with this. For about 2 years I did what you are asking...I charged 100% of everything to my CC then paid off the balance every month. What ended up happening though was slowly over time, the balance would start growing because of random expenses going up, but my income remaining the same. So after two years I'm left with like a thousand dollars of debt on top of paying it off every single month for exactly what I owed.

Essentially, if you are really really good at not buying shit (on top of normal expenses), or having some savings you can dip into to pay off extra stuff, then go for it. But if you are like me and suck at saving and find yourself buying random things that look cool, don't. Just keep using the debit card. When you have thousands of dollars at your finger tips and the mindset of ,"oh, I can pay it back eventually nbd" you can get in a little bit of trouble.

Well with my debit card I only ever bought what I needed. Gas and food and crap for home like at Wal-Mart or department stores. Food on weekends, alcohol, etc.

I only asked this because right now I started charging the Cc and my current balance is $193 but my statement balance is $93. Due date is after next week. This is only for gas and food for last billing cycle and then whatever I charged for up until now.

So I'll pay $93 by next week and the rest of the balance is for the next billing cycle.

 

[smackababy]

Well with my debit card I only ever bought what I needed. Gas and food and crap for home like at Wal-Mart or department stores. Food on weekends, alcohol, etc.

I only asked this because right now I started charging the Cc and my current balance is $193 but my statement balance is $93. Due date is after next week. This is only for gas and food for last billing cycle and then whatever I charged for up until now.

So I'll pay $93 by next week and the rest of the balance is for the next billing cycle.

$100 balance isn't going to kill your credit score unless your total available credit is like $300, and even then, it won't hurt it that much. The only issue is that you will be paying interest on the $100, which is money you shouldn't have to pay. You should try and knock some of that down, if you can swing it. Even if it is paying like $123 rather than $93.

 

[highland145]

I believe FICO only checks the debt:limit ratio once per week. So you could pay off 1/4 of the bill every week, and hopefully never go over the 30%

I wonder if your score is out there all of the time or is it generated only at the time of an inquiry?

Also, if FICO sends info to the bureaus regularly or if they get it from FICO when there's an inquiry?

Inquiring minds....

 

[Muse]

Someone got my CC number a couple weeks ago and made a $500 online purchase, from the other side of the country. It went through. 2 minutes later they tried to make a 2nd $500 purchase at the same online store (BJ's Warehouse), and my CC company denied it (automatically, I'm sure), because it wasn't considered consistent with my usage patterns. Two days later they were denied a purchase at a pizza joint in MA, dumbass(es).

Well, I'm not liable, have my new card. From now on I'm going to make all my day to day stuff on one CC, my autopays on another. Just less hassle if my number is hacked.

I have never used a debit card, don't want one. They are just less secure. I have autopay against my checking account with all my CC's, all my utilities, all my serial purchases. Therefore, no interest payments, high credit score. I have to keep an eye on my checking account balance. For an extra fee I could have overdraft insurance at my bank, but I don't do that, haven't been overdrawn in a long time and even if I am for a few days and a few bucks I don't think it affects my credit rating.

 

[ultimatebob]

If I was only going to have ONE credit card to charge everything, it wouldn't be a Discover. There are still too many restaurants that don't take it.