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Question By
wcamspacher

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Confused About Carrying a Balance
I have a credit card with a credit limit of $3000 from Chase. The latest balance on my statement from 8/27 was $30. The entire $30 was a single finance charge. I paid this off on 8/28. At that point my daily balance was $0.

Since then I've charged about $1200. My next statement arrives on 9/26. My initial thought was to pay $1000 before this date to get my next statement's balance to $200. Optimizing utilization rate and all that.

First off, am I understanding the process correctly in that the $200 will not be subject to an interest charge since I paid off the $30 within the proper grace period? Or, do I need to pay off the entire $1200 before my next statement arrives to avoid interest because I came into the current period with a balance?

Secondly, assuming I'm right about the process and I can leave $200 (or a similar small balance), does this sound like a good strategy to you?

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Sounds like either a question to ask Chase, or a trial and error thing. As far as leaving balances on your card you should use your TOTAL debt and TOTAL credit limits (not just one card.) It is better to have a combined amount that calculates to 1% or more so that it results in 1% and not 0% utilization.  I don't believe there to be more than a negligible difference between carrying zero debt and carrying 1% debt though, to your actual score.

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Reply by
jwsister

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Don't go asking the bank!!  They'd love to have you carry a balance so they can get the interest payments.  And the only "trial and error" I'd recommend it to try things out on one of the financial tools on this site so you can see what you are doing without suffering the consequences that could happen with a wrong decision.

When you paid that $30, it was the total amount due on the credit card statement.  This next one should show the $1200 you have charged so far.  Whatever shows on the next statement is the amount you should pay in full.

By the way, your total utilization so far with that $1200 charges is 40%, when the ideal is less than 20% (which would be $600).  The lower utilization rate is much better for your credit score.

Do not ever leave any amount on your credit card statement unpaid until the next month unless you really want to pay interest, which is not smart.

Hope this helps clear things up for you.

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