Credit utilisation.

2min read
Posted 10 April 22

Most cards will have a credit limit, which prevents you from advancing (or borrowing) a lot of money in one go. Your previous behaviour and credit score determine the limit you're allowed. 

So if you want to get trusted with more borrowing credit, you have to improve both these factors. But they'll always be a limit to what you can borrow — it'll just be a lot smaller when you start.

The ideal amount.

While you may be able to borrow $500 a month on a card, credit providers like to see some restraint on what you borrow. Ideally, it would help if you were aiming to utilise (or 'use up to') 30% of what you're allowed to take out. This also prevents you from overspending.

As an example $500 x 30% = $150 you could spend a month.

Credit interest.

Interest is charged on any purchases you make after the date of your closing balance. This means if you haven’t paid what you owe by that date, interest will accumulate daily.

Interest is also charged on any cash withdrawn from your card from the day you take them out or when you transfer your balance over from your card.

Your interest is important to know when trying to make the most of your credit utilisation. All these expenses add up, so it's important to think about when you can repay a borrowed amount.


Stop! Disclaimer!

Info and tools on the Yonda website are to be used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.