credit cards

Fact No. 6: Card balances can be tricky

8 little-known facts about your credit card
Card balances can be tricky

Some cards have no spending limit, but they may limit the amount you can carry from one month to the next, says Chi Chi Wu, staff attorney with the National Consumer Law Center.

If so, you're required to pay the amount that's greater than the "revolving" limit with your next payment, she says.

For example, charging $7,500 on a no-limit credit card may sound great in theory. But if the maximum you're allowed to carry month-to-month is $5,000, you're on the hook for $2,500, she says. Wu recommends doing the math before you charge.

So what if you never carry a balance? That might not be what your credit report is telling lenders, says John Ulzheimer, president of consumer education at SmartCredit.com.

Often the balance recorded on your credit report is the one listed on your monthly statement, he says. What your report may not show is whether you carry a balance or pay in full.

The trick to maintaining a zero balance on your credit report is to pay the bill in full before the statement date rather than the due date, he says.

The potential boost to your credit score?

"It's colossal," says Ulzheimer. "We're talking about the second most important category in (calculating) the FICO score."

 

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