I’ve been looking at articles about credit cards and a lot of them say to keep credit card utilization under 30%, ideally under 10%. If that’s true, does that mean cashback should rarely be above $1-2 per month? Is cashback a strange way to lower your credit score in exchange for small amounts of money? I couldn’t find anything explaining the relationship between these two opposite mechanisms of credit cards. Thanks.
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A few things:
>a lot of them say to keep credit card utilization under 30%, ideally under 10%. If that’s true, does that mean cashback should rarely be above $1-2 per month?
You can payback what goes on the card early. They only check utilization when the statement posts.
Also, utilization has no memory. You can have higher utilization for years, and then keep it low during the month you apply for the home/car loan, and it will give you the full benefit. It’s not like the other parts of credit where you need to build it up over time.
>Is cashback a strange way to lower your credit score in exchange for small amounts of money?
Credit card companies and companies looking at your credit have different goals. For credit card companies, cashback is an incentive for you to use the card more. They don’t really care (directly) about how that affects your credit, as long as you don’t default.
Companies like ones that give car loans want a good credit score because it makes you more likely to pay it back.
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