If you want to avoid that, you can pay the card balance before the bill gets produced. Say you paid off $10K of the $12K bill, it will show as using $2K of your available credit, not $12K when the bill is produced.
Average credit card debt by state graphic
- Thread starter GON
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Can't say I track the balance closely, don't really know what I owe till the bill comes.
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I don't have any debt nor any loans. I do pay as much as I can through credit cards to earn the cash back. I still value a dollar. My son's braces are on the back of my mind, I know how much that is, and it is a lot to me, and I will spend it, unlike my parents on me. But it matters, as does a car repair where I spent $500 too much as I got caught with my pants down at the dealership (I paid just to get my inspection stickers and be done, as opposed to ordering online, going to indie garage, and 2 more days off from work).
I was just at 848 on Experian 9, and I bit. btw when I paid off the house AND got a rewards credit card, it dropped 40+ points and took over 1 year to recover.
Anyway when I say I bit, I decided to pursue a pre-approved offer, at the last minute. I figured that I had an unexpected car repair that week, and $200 to offset it mentally would be nice:
Lo and behold I get the we will notify you of our decision by mail. Wonderful. Instantly I got alerts that someone has accessed your credit report (both standard and those protection deals that came from breaches), and the score has now dropped by 19. What insult to injury, no credit, and drop my score for 1 year, and on my record for 2!
Yesterday I get a letter, we cannot continue processing your application unless you contact us, signed, Account Protection Team.
I call and am asked: last 4 of social, name, address, DOB, and to read back a code on a text from the cell listed on the application. After all that, you are approved.
All this, so I can spend $1000, earn 2%, and get $200. Maybe next time, I'll walk (is that an expression it popped into my head).
rip these offers up!!!! lol
The States with the least credit card debt are the poorest States because under the Credit CARD Act and other laws, the bank has to consider how much debt you are likely to repay. The median household income in Indiana is $69,477 and in Illinois $80,306, so we can (on a median income basis) obviously afford to service more debt than Indiana, and some of us a LOT more. There's simply more white collar six figure jobs here.
With that said, I have 17 credit cards with almost half a million dollars in available credit between them. My debt-to-income ratio is less than 1% and that's only registering because of the statements posted with balances that are then paid in full. When I was living in Indiana in 2007, and working at factories and at Walmart, I could barely get a $500 student credit card.
Now, I'll tell you what this ridiculous idea of capping interest at 10% will do, just the economic facts, sir. Capping rates at 10% is an idea that sounds good, but it is not.
What will happen if they do it is the banks will start mass closures and balance chasing of consumers they are not absolutely sure about. Credit will dry up almost entirely. The 10% rate will likely not apply to the more than $1 trillion of revolving debt on credit cards, leaving everyone with what they already owe at the rate they already pay. They will be cut off from new credit, and the proposal will spark one of the largest waves of Chapter 7 and Chapter 13 bankruptcies we've ever seen and a record number of Americans will have to learn to live with ruined credit ratings and no access to debt except maybe if payday loans (exorbitant rates), tribal loans (extremely predatory exorbitant rates), and car title loans (where the car hauler comes if you can't pay for the loan).
It will completely shatter many people's world. Some will wise up and start cutting expenses to the bone and quit playing scoop and toss though, after the bankruptcy. And in a 10% cap nobody will give another credit card to a bankrupt for many years.
Some banks may turn to annual fees on cards that do not have them now, or raise them on cards that do, and/or eat into the rewards programs that responsible people such as myself have come to enjoy, which would spark me to triage my credit card lineup myself.
In the 70s-90s before and between the SCOTUS Marquette and Smiley (just providing them for reference so there's background in fact for what I am saying next, to which I am not expressing an opinion on the ruling), Citibank's president at the time said they were being "killed" in their credit card division. They were capped at like 12%, and they had to borrow money at almost 20% at one point, it fluctuated, but it was high, and their credit card division was losing money on every customer. When they all took advantage of the Supreme Court decisions to move to States that now let them export the State law on usury where the banks were located, they mainly went to South Dakota, and then Delaware copied that law, and now Nevada and Virginia (Capital One) are big too, because it does not matter if the State you're in has a usury law, because the controlling law is where the bank is at. So States that repealed their usury law gained a lot of jobs in the banking industry, and suddenly there are tens of thousands of bankers in the middle of South Dakota.
I personally, from an economic standpoint, don't like the 10% cap. I think it's dumb. I think it sounds good to people who don't realize that they're not asking for what they think they're asking for. And that the banks will be very conservative on risk if the only spread they can make on interest is 6-7% and they can't afford as many accounts going into default as you can at 20-33%.
Look, I don't want people to be poor, I don't want them in lots of dumb high interest debt. But it's just a fact. If you were the bank, would you lend to credit risks at 10% if they had a 600 FICO score now and you were comfortable with something like Capital One's COMET portfolio with $500-1000 cards with no rewards and 33.64% APR?
(COMET is a Trust set up for Capital One's riskiest borrowers. They give them a very small amount of credit each, and issue lots of those cards at high interest rates, then collateralize them into investment grade debt securities for other institutions to diversify away from their usual clientele. JP Morgan even owns some of it even though these people would be Untouchable normally by their standards. From the borrower's point-of-view it looks like they got a normal Capital One credit card, but there are tells, like no matter how much you ask for a credit line increase, it never grows much, and I think all the cards start in like 5578 iirc. Eventually if your credit rating improves and you want to get a better card with a higher limit, you'll have to apply for the card you want. But once you do that and the new account has aged, you can move all but $500 of the credit line from the COMET card.)
If you were the bank, would you loan a bunch of money at 10% to a 750 FICO person with a generous rewards structure, and that person makes sense at 24% and might be profitable on the whole as low as 18%?
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Bread is a nasty company. They say you're preapproved then they denied me because I use a prepaid telephone number to save money, even though I have 17 credit cards with almost half a million dollars available credit and not much of a debt-to-income (see my last post).
I asked the representative why they can't verify you for fraud alerts at the listed number if it's a prepaid cell, and she said "It's a new policy.", and their attitude was like "WTH do you want me to do?"
Your FICO should not drop 19 points over a hard inquiry unless you already had a bunch of scorable inquiries. They're scorable for 12 months from the date each one was ran, and they are on your credit reports for 25 months. You may not dispute them unless you are saying they were fraudulent.
The new account (Average Age of Accounts dropped, a new account not at least one year old was added, to your credit report) was probably the source of the FICO score damage.
Don't go around asking for loans and credit cards willy nilly. Not only is it stupidly destroying your FICO score, it makes you look credit desperate, and you'll go over your 5/24 for Chase and similar rules, and won't be able to open those cards because they don't want bonus churners who sockdrawer the card.
I've made several thousand in new card bonuses. The key is you go low and slow. Authorized User cards are not worth getting on your report if it's a decent report. They count as 5/24 slots and you have to call the reconsideration line and ask for them to disregard those.
And mortgage underwriting doesn't like AU cards.
It's a terrible idea to use BNPL for so many reasons. One of which is it doesn't always post to your credit report unless you default, so they can only hurt you. If they show as paid as agreed it still hurts you because they're marked "CFA", Consumer Finance Account.
Who knew a credit score devised for banks would penalize you for sidestepping banks?
Interest only happens if you don't pay the "Statement Balance" within the grace period (minimum 21 days by law, but most give you 24-28) and you only have to pay that once a month when your statement cuts.
You're not dinged for using it. You're using too much of your available credit. This factor has no memory beyond the month it got posted, but if you don't want the hit even for that month, pay the balance before the statement closes.
If you use more than 88.5% on a card, that card also gets the "maxed out card" penalty.
There's also a separate score factor for "used credit across all cards". So your total available credit vs. what you used.
Easiest way to make sure a statement never closes with outrageous levels of utilization is to request a credit limit increase. Most banks only do a soft credit pull, although Wells Fargo once told me they could do a smaller CLI with a soft or a higher one with a hard and the amount they'd do without a hard was plenty. Most card companies will ask how much you want your new credit line to be and will just propose a smaller increase if they can't give you the entire amount.
These programs are so stupid they should be criminal.
Mom uses them on Amazon, and you could do a 6 installment plan on their store cards with no interest (Chase for good credit, probably Synchrony Bank for hers.) without risking a CFA penalty on your FICO score.
I don't need installments for anything, so I take the 6% cashback.
I can see financing a car if you have to and it's your only way to get around, like if you live somewhere without reliable public transit, but you shouldn't go all out and bling bling a car that's just going to depreciate, rust, and fall apart and hit potholes. It's just a car.
You should have a sizable down payment, look for an off lease Honda or something where someone else absorbed most of the hit but the thing is in good shape, and don't go out forever on the loan. No more than 36 months. That'll get it paid off and make sure you're not handing the bank a higher interest rate for twice as long. Shorter loans mean you have to pay it off quicker which limits your window where something bad happens and you get them repossessing the stupid car.
Ideally you'd pay cash but a car is at least a major purchase.
Many of the things people use credit cards for that are not just "a cash management tool with rewards points for things I have to buy" are foolish.
For example, I made over $150 in credit card points on my spouse's immigration filing fees and $27 on two surgeries for my cat that happened kind of back to back. If I handed them cash, where would that $177 in tax-free income come from? They just keep it.
I make over $50 back every month on our groceries and occasional restaurant meal.
Bills are unpleasant but at least I can keep some of the money in my pocket instead of theirs.
Today, the bank turned around and gave me $5 back for filling my gas tank. That happens about every 10-12 days.
Every month I get a few bucks for paying the electric bill.
Look at it like that. It's not going to save the world, but it's something.
No, wasn't that. Was a $3 or 4k total bill on a card with a $20k limit.
I don't really care, just was like... uh... no, there's no balance on anything but a mortgage, everything else paid in full when the bill is sent.
I use mine for everything to get airline miles and pay it off once it gets posted online....works for me..
A 3 year old Honda is like 90% of MSRP, only minus factory financing. Not only that, but if one can't buy it new, what are the odds of them being able to live with 36 month financing? Between higher APR and the non-depreciation of Toyonda's you really need to go much older to get into the realm of what I suspect many would consider "affordable" on a 3 year loan (wild guess, well under $500/month). Looks like 8-9% APR on used?
Obviously one can play with the numbers all day long, up on APR and down on sales price. $15k doesn't buy a lot of car today... If median income is $55k/yr then this is right at 9% of gross income.
I'll agree, one is better off financially used. My issue is, the days of finding good used cars... is a lot harder than it used to be. And with more risk IMO, although that is debatable. A used car at the $15k value needs to have a repair fund handy--one should always have an emergency fund, but it has to be stated, since most don't.
That's what they keep saying but I still would never apply for any credit card. Never have, never will. The interest rates IF charged & the stress of "Paying it off in time" leaves me out of that game. Save back some money to borrow when needed & pay yourself back instead = 0% interest not 20%+ & a stress free way.
I am getting a $1,023.00 dollar rebate check from my Costco credit Card in about a week. I will take it.
@GON your graphic cites Alaska's $7,338 average using 2023 methodology, but Q3 2024 data reveals far starker realities:
Top 5 States
Top 5 States
- Connecticut: $9,323 (up 5.5% QoQ)
- District of Columbia: $9,209
- California: $9,191
- New Jersey: $9,112
- Florida: $9,094
- Your source averages all residents, while Federal Reserve data shows $9,040 for Alaskans with active balances
- The $1.17 trillion in revolving debt (Q3 2024) explains why 18 states now exceed $8.5K averages
- Methodology matters: "Average debt" calculations ignoring the 32% of Americans with $0 balances artificially depress figures
FWIW this link seems to be broken.
Lots of Americans are cash poor and have to rely on credit cards or Buy Now Pay Later apps to make it.
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