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I am an immigrant and the concept of credit cards is fairly new to me, I understand it enough and know that using more than 30% percent of your credit card can hamper or negatively impact my credit score. My bank credit card has 1 percent cashback on all transactions. I thought It'd be clever to pay off my entire tuition fees spread across 4 monthly installments to get a good amount of cashback (my total tuition amounted to 15k my college split this in 4 installments throughout the year so that'd be 150 dollars + other transactional cashback right now totaling at 180 bucks) (not much but to me it is a decent amount). My question is, is this a really dumb thing to do. Other than that, I have a habit of paying of my debt on time, never been late but I do make a lot of transactions and pay them off immediately so I am definitely crossing my credit limit but paying transactions off weekly or so. Is this a stupid strategy on how to use your credit card P.s My current credit limit is 500 dollars can be raised easily or I can get a new one

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    Does your school charge a "service fee" for using a credit card to pay tuition? Many do (including my kids') and that usually more than negates the cash back.
    – D Stanley
    Oct 27, 2021 at 1:41
  • @DStanley no they do not, i just overpay and pay the fees no extra charge whatsoever
    – ohmycredit
    Oct 27, 2021 at 1:49
  • Might not be an issue (I've no idea whether CC agreements have such clauses), but it is probably worth checking that you still get cashback when using an overpaid / credit balance. I can see reasons not to limit it (they get processing fees on a larger amount), as well as reasons why they might (you're less likely to carry a balance and pay interest).
    – TripeHound
    Oct 27, 2021 at 9:14

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Credit utilization is, mostly, point in time: how much do you owe, right now. So unless you plan to take a major loan soon (probably not if you're a young student and have only a $500 limit), it doesn't really matter what happens to your credit utilization: from the credit score point of view, this is a neutral to slightly positive thing overall (if you wouldn't otherwise use the card, it might help a bit to add some payment history, otherwise it just is irrelevant).

But don't get in the habit too much of chasing around 1%. Certainly use that 1% when it's convenient, but it's rarely worth the time to chase it down. This might be the rare case, but even here it seems like a fair amount of work.

And as pointed out in comments, make absolutely sure there's no "credit card fee" for using the card at the school; it's pretty common nowadays for them to push the 2.5% or so they pay in interchange fees back on you.

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  • Thank you for the response, I will keep this in mind going forward
    – ohmycredit
    Oct 27, 2021 at 3:00

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