Shouldn’t I charge everything I can to earn points?

Last Updated: May 16, 2013 09:01PM UTC

Because credit utilization ratio (the difference between your available credit and the credit balances you carry) is a key factor in your credit score, you need to consider the risk and reward of charging just to earn points.

Though financial experts cite many different figures when it comes to utilization, the consensus is generally that being “utilized” at no more than 30% (meaning, your credit card balances owed do not account for more than 30% your total available credit), and ideally, as low as 7%, is the “sweet spot” for a positive credit score.

Utilization ratios higher than 30% start to tell lenders you’re spending more on credit cards than you’ve got in cash—even if you pay those balances in full each month.

If you don’t intend to buy a home, open new credit, or refinance any time soon, the rewards you earn by charging all your purchases may indeed be more valuable than protecting your credit score, but you’ll need to weigh the pros and cons.

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