Paying Credit Card Bills on Time Is Not Enough to Manage Credit Utilization Ratio

(Newswire.net — March 2, 2017) Tallahassee, FL — There are many do’s and don’ts in properly managing a credit card. Credit card management is essential to avoid overspending and financial embarrassment.

Paying credit card bills on time is not enough to manage credit utilization ratio. Credit utilization pertains to the ratio between a card holder’s credit card spending and the card’s sanctioned limit.

It is cumulatively and individually calculated. Thus, the cumulative credit utilization is the card’s overall spending versus the total sanctioned limit.

Ratio is important primarily because it is the largest contributor that breaks or makes the individual’s CIBIL score after the repayment history.

Cardholders should understand that having a high credit utilization indicates that they are credit hungry and have poor debt management skills. These two indicators can mean that they have a risky borrowing behavior, which can actually make their CIBIL score low.

There are smart ways cardholders can use to manage their credit utilization ratio, and one is to simply reduce their expenditure. This is a simple technique especially if the credit card’s expenditure is high due to impulsive and unplanned purchases. 

Getting a bigger credit limit is also recommended. They may reduce spending or increase their limit to decrease the ratio. One of the options is to actually get a bigger limit. 

It is important to remember that cardholders with cards issued from a few years back can forget to make some revision on their sanctioned credit limit despite their eligibility for it. Consumers may get in touch with their card company and determine if they are eligible for a higher limit.

Another method is to consider the possibility of having an additional card. This option can be ideal for individuals who cannot get a higher limit due to the rules imposed by the credit card issuer.

An additional card allows cardholders to increase the overall available credit limit. This makes it possible for them to control or manage a high credit utilization ratio.

Experts also recommend that cardholders should distribute their expenditure smartly between cards and simply try paying mid-cycle once a while.

In addition to resorting to these methods and managing credit utilization ratio, it is imperative that cardholders are able to protect their cards at all times against identity thieves.

There are RFID blocking sleeves available nowadays that offer protection for credit cards. These sleeves make it difficult or even impossible for identity thieves to steal personal and financial information from consumers

Individuals who want to purchase these sleeves may go to amazon.com.

(www.amazon.com/RFID-Blocking-Sleeves-Protector-Protection/dp/B0150T0AI2/)