Credit card question

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Freebirdfourtoeight

• June 17, 2022 12:30

Hello. I just recently got my first ever credit card. It is capital one quick silver secured credit card with a $200 credit limit. It was to my understanding that but each closing cycle I am supposed to have no more than $60 to carry over into the next month, which will be that 30%. This is my first month and I'm noticing that when I pay credit card sooner my credit limit goes back up. I'm just confused on how it works. How am I supposed to follow that 30% if my credit limit keeps going back up every time I pay my card? What should I do? I'm really trying to build credit and idk what I am doing. Does anyone have any insight for me.

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  Sara

  • June 17, 2022 22:29

  Thanks for your question, and congrats on your first credit card!

  These articles may help you better understand how credit utilization works:

  • How to Calculate Your Credit Utilization Ratio
  • 30% Credit Utilization Rule: Truth or Myth?
  • When Is the Best Time to Pay My Credit Card Bill?

  An important thing about the 30% "rule" is that it's beneficial for your credit utilization ratio to be below 30% when your credit card issuer reports your balance to the credit bureaus each month. The timing of this reporting doesn't necessarily coincide with the timing of your billing cycle and may happen at any point in the month.

  For this reason, it can be beneficial to keep your balance - and resulting credit utilization ratio - low throughout the month, instead of accumulating a large balance until your bill comes due. Even if you pay your credit card bill in full, the high balance that got reported earlier could still hurt your score. That last article I shared includes more information about this. I personally try to pay off my credit cards every week or two, if my budget allows for it :)

  Wishing you success on your credit-building journey!

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