For the last five years I've had a baby Visa card ($500 limit) that I've paid off religiously; I haven't paid a cent of interest and I plan to keep it that way.
To build credit (and to get a cash rebate, however miniscule) I put my large expenses on it then pay it off from my chequing account within a few days. Essentially this means that if you look at one of my month's statements, you'll see more than my limit in expenses, for example $650. Since I buy and pay things off when they appear, things don't necessarily align to the monthly statement dates -- so as an example, if I pay my bills on the 6th, and the statement is on the 9th, it'll appear like a $300 balance even though it's paid by the 12th. Sometimes there's barely anything on it when it rolls over.
Last night I was reading that credit rating is negatively impacted by debt utilization ratio which means the amount of credit used to the amount that's available. That made me freak out because the way I use my card combined with my low limit puts me well above the 30% recommended limit -- I rarely come in at under 50%.
My bank is trying to throw me a $1000+ card, but I just see it as a shovel to dig myself a huge hole (and a credit application will ding my score), so I haven't accepted one.
Is this negatively impacting my credit score or does Visa expect my utilization to be off because the credit limit is so low? Should I take the larger credit card?
PS: Am I correct in understanding that utilization ratio is the amount of net unpaid usage of the card? Because if it's gross usage then I'm at least at 130% each month