The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
With gasoline prices at sky-high levels across the country, many consumers are now being given no choice but to put their fuel purchases on their credit cards as a means of making ends meet. But this can have a negative effect on consumers’ credit scores and put them in some pretty deep debt if they’re not careful.
[Free Resource: Check your credit for free before applying for a credit card]
It can also be inconvenient, according to a report from the Fairfax News. That’s because when credit cards reach their limit while drivers fill their tanks, the pump usually just shuts off, meaning that these cardholders are stuck with a maxed-out balance and a tank that’s not as full as it needs to be.
Of course, a borrower’s credit utilization should never be allowed to get close enough to the limit that this will happen, but for some people, it’s unavoidable. Gas is often necessary for people to live their day-to-day lives, so fitting these purchases into a family budget every month – and avoiding the use of credit cards – might take a little bit of work.
Overspending of any kind will have a severely negative impact on your credit score because the second-largest portion of borrowers’ credit scores is the credit utilization ratio – that is, the amount cardholders are borrowing at any one time versus what their total combined limits are. The more borrowed, the lower this aspect of the score. In most cases, experts recommend having a credit utilization ratio of no more than 20% or 30% of the total card limit, but the lower this number gets, the better.
[Credit Cards: Research and compare gas credit cards at Credit.com]
Of course, putting too much on a credit card will obviously also have the extreme negative impact of sinking consumers into debt, sometimes severely. This can lead to even more shortfalls and debt every month because of increased minimum payments and high interest compounding the amount owed.
The key to maintaining good credit health is borrowing responsibly, looking for ways to make sure debt totals stay relatively low, and making all payments on time and in full.
Image: ^riza^ via Flickr
March 11, 2021
Personal Finance
March 1, 2021
Personal Finance
February 18, 2021
Personal Finance