Can I overpay my credit card before a big purchase?

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asked Jan 16 in Other-Finance by Quackenbush (11,470 points)
Can I overpay my credit card before a big purchase?

1 Answer

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answered Aug 25 by Markbob (10,850 points)
You can overpay your credit card before a big purchase which will give you some additional spending room on your credit card.

When you overpay on your credit card there is no penalty and if the negative balance is not significant and you use your credit card regularly you can just spend the statement credit on purchases.

After you've spent it then you will then be using the regular credit line again.

If you make a big purchase on your credit card it can bring you close to your credit limit and if you don't pay off the balance quick enough it can even negatively impact your credit score and lower your credit score.

It's recommended that you always keep your credit utilization below 30 percent.

Using your credit card for big purchases can affect your credit score negatively if it raises your credit utilization too high.

Credit card issuers also send activity reports to credit bureaus at the end of your statement period.

A purchase is considered a big purchase on a credit card when the purchase brings you over 30 percent of your credit utilization.

A big purchase on credit cards depends on your overall credit limit.

For example if you have a credit limit of $2,000.00 and you make a purchase for something $1,000.00 or more then that can be a big purchase on your credit card.

If your credit card doesn't have a preset spending limit, then you should probably contact your credit card issuer before using it for a major purchase.

You should not keep a small balance on your credit card and if you can pay off the credit card in full you should do so instead of leaving or keeping a small balance on the credit card.

You should avoid leaving a small balance on your credit card and instead pay off the credit card in full so you will also save in interest and have a good credit rating.

You should pay off your credit card in full when possible instead of leaving even a small balance.

Paying off the credit card in full means you pay less or no interest and increase your credit utilization rate and credit scores.

Keeping a small balance on the credit card is okay if you can't pay it off in full but you will be charged more interest.

Keeping the credit card paid off in full can also help increase your credit limit.

If you get denied a credit increase it can impact and lower your credit score although it doesn't always lower your credit score.

Getting denied a credit limit increase can lead to a review or hard or soft inquiry on your credit report before they make their decision.

If the credit card issuer does a soft inquiry when deciding on a credit limit increase then it won't affect your credit score but a hard inquiry will.

The amount you should increase your credit limit is an increase from 10 percent to 15 percent of your current credit card limit.

Any credit card limit increase higher than 25 percent can trigger a hard inquiry on your credit report which can then lower your credit score.

Credit card interest rates are capped at 36% for active-duty military service members and their covered dependents under the Military Lending Act.

Although there is no federal law that limits the interest credit card companies can charge in general.

You can transfer money from your credit card to another credit card by doing a money transfer from your first credit card account to another or by contacting the credit card issuer and requesting a money transfer from one credit card to another.

You can transfer money from your credit card to your debit card by doing a money transfer.

Transferring money between a credit card and a debit card is very similar to transferring to a bank account.

To transfer funds to a debit card, all you need is the name on the card, card number and expiry date.

You can use a credit card you just got approved for once the credit card has been issued and the credit card number is activated.

You can get your credit card number before it comes in the mail by asking the credit card issuer for the credit card number and the security code.

However the card will need to be activated before the credit card number will work so it's best to just wait for the credit card to arrive in the mail which takes around 5 to 7 days.

You can get your credit card number without a card by calling your credit card issuer and ask them for the credit card number.

The credit card issuer will ask for some things for security such as social security number, name, registered mobile number, address, zip code etc.

Then the credit card issuer can provide you with your credit card number.

If you've lost your credit card then you can ask for a replacement credit card to be sent so that you have your credit card again and your credit card number.

A good credit limit for one card is $30,000.00 as that is the average credit card limit.

However most people who first get credit cards get a credit limit of $500.00 to $1,000.00 although it may be higher depending on your credit score and income.

In order to get a $30,000.00 credit limit on a credit card you need an excellent credit score and a high income and little to no existing debt.

A person should have no more than 3 credit cards at a time as more than 3 credit cards at one time can affect your debt to income ration and lower your credit score indirectly.

Having too many credit cards should indirectly lower or impact your credit scores by lowering your debt to income ratio.

The debt-to-income (DTI) ratio is how much money you earn versus what you spend.

And your debt to income ratio is calculated by dividing your monthly debts by your gross monthly income.

Generally, it's a good idea to keep your DTI ratio below 43%, though 35% or less is considered “good.”

However your credit score should not be lowered much or at all if you pay off the credit cards when you're supposed to and use them properly.

The golden rule of credit cards is that you should pay 100 percent of the credit card bills and balances as possible which reduces the interest you pay to a bare minimum.

A card reserve charge is a charge that is pulled on your card to act as a safeguard for the payment processor to cover any possible charge backs, refunds, potential fraud or other financial obligations that can arise from credit card transactions.

The reserve charge mitigates the financial risks associated with processing credit card payments and then the reserve charge will be returned to you within a few days or so.

Credit card churning is a process where you open credit cards for the sole purpose of earning welcome bonuses and other benefits.

Most often credit card churning involves the closing of cards after any bonus points post to the account and before the next annual credit card fee is charged.

There's no limit to the amount of credit cards a person can have but having too many credit cards could get you into severe debt that can be hard to get out of.

Too many credit cards won't hurt your credit as long as you use the credit cards responsibly.

However if you use too many credit cards and don't pay them back then they could hurt your credit score.

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