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Posted in Credit Cards
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Question By
CreditBoz

7 Contributions
119 People Helped
Highest CC Balance
I have obtained several new credit cards recently. I tend to pay off the balances of my old cards every month, but I have a different plan for the new ones. Having seen the "High Balance" entry on my credit report (indicating the highest the balance has ever been), I wondered if it would be good to run up the balance on the new cards for the first month or two only, by paying only the minimum payment, and then resume paying them all off in full after that. The idea is to show that I use the card and have paid interest, despite the fact that my current balance will be zero or close to zero in the future. Since the "High Balance" entry on my credit report lasts forever, I want to bump that up as a one time deal and then return to saving money on interest by paying in full once I see the "High Balance" show up on my report.

Is there a flaw to this logic?

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Top Contributor
7344 Contributions
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MAJOR FLAW!!

It is never good to show high usage on any credit card and it's not very smart being willing to pay interest on an account when you don't have to.  The ideals to strive for are moderate usage (below 20%) and having credit cards paid in full as quickly as possible so that the available credit is high.  When you show a lot of available credit, that's a plus.

"High balance" can be a negative, depending on how much credit you've had available.  You really don't want to keep a balance on the credit cards unless absolutely necessary and then, you want to get it paid off ASAP.  The "available credit" is the most important number to keep as high as possible, not the "high balance."

Reply by
CreditBoz

7 Contributions
119 People Helped

Thanks jwsister.  It didn't feel right, but I couldn't put my finger on why.  Your response helped. 

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