I have a credit card through my local credit union. I am not sure if this is normal: Essentially, I am using my credit card like a debit card. If I anticipate any major purchases I will put money on the card prior to charging it. I try to keep a couple hundred dollars negative balance at all times. I have never charged amounts to my card where I have a balance due at the end of my billing cycle, so I have never paid any interest/always have the card paid in full.

I did not want to get a credit card but realized I needed to build my credit score somehow, so I got this one. I am used to paying everything in cash (which I still do for the most part). I found this method easiest for me because I do not need to keep track of my purchases or when payment is due.

  1. Am I building a credit score using my credit card this way?
  2. Is this helping/hindering my goal of establishing credit?

Edit: I mistakenly misused positive balance for negative balance. It appears I am using 0% utilization of my available credit.

Edit 3/2017: Coming back here to update for any future readers.

My original question was asked because of my reluctance to use a credit card, and ignorance of what 'good credit card usage' habit really is. I was confused to when you have to pay your balance, how much you have to pay, and what the interest rules were. I basically did not understand any of this and made a plan to pay the card in full before using it.

In hindsight, I agree with the sentiment from the responses below: this was wasted effort. I went the long way around using a credit card because I did not know how everything worked! Wasted effort borne from ignorance.

If you are using a credit card as a debit card, and are wondering what are the effects on your credit score, you are doing the following:

  1. Payment On Time - GOOD
  2. Credit Card Utilization 0% - BAD
  3. Credit History - GOOD

I have an approximate credit score of right under 770. I spent 4 years with 1 credit card and no other form of debt. I have paid in full every month and have paid $0.00 in interest for the history of my account. At this phase in my life, I now have multiple lines of credit (student, auto) and am considering getting a second credit card to diversify my credit history.

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    Questions like these always puzzle me. Effectively the OP is saying they don't intend to use credit, but are very concerned about their credit score. Okay, I realize credit scores are used for non-credit things, but in those cases it doesn't seem worth it to fine tune your score.
    – JohnFx
    Commented Aug 1, 2013 at 15:01
  • I am simply asking about my credit card usage habits because that is the only way I have used it since I first requested the card and hope that I am actually have positive credit score growth. I am not very concerened with my credit score, just very concerned if my card usage habits are not in wasted effort.
    – Chael S
    Commented Aug 4, 2013 at 7:46
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    Just a comment on your update: Your credit score is already excellent, and there is no reason to take out any debt you don't need just to try to boost your score further.
    – Ben Miller
    Commented Mar 14, 2017 at 12:55
  • @BenMiller I agree that opening up any additional lines of credit will not boost my credit score very effectively. What I want to do is diversify where the bulk of my good credit score comes from. My longest line of credit is with my 4 year old credit card. Getting an additional credit card would not put much strain on my financial discipline and hopefully help me maintain a good score.
    – Chael S
    Commented Mar 14, 2017 at 17:57
  • "am considering getting a second credit card to diversify my credit history." Do it to still have a CC if you lose your primary card.
    – RonJohn
    Commented Jul 26, 2019 at 1:44

4 Answers 4


I strongly suggest you look at CreditKarma and see how each aspect of what you are doing impacts your score. Here's my take -

  1. Active account - Good
  2. Zero Balance/Utilization - Actually bad
  3. Building length of credit history - Good
  4. On time payment history - Good
  5. Credit score requests - Good (as you appear to not be applying for more accounts. The credit requests falls off after 2 years)

There's an anti-credit approach that many have which, to me, is over the top. "Zero cards, zero credit" feels to me like one step shy of "off the grid." It's so far to the right that it actually is more of an effort than just playing the game a bit. You are depositing to the card frequently to do what you are doing. That takes time and effort. Why not just pay the bill in full each month, and just track purchases so you move the cash to the account in advance, whether that's physical or on paper? In your case, it's the same as charging one item every few months to keep the card active. If that's what you'd like to do, that's fine. I'd just avoid having the card take up too much of your time and thought.

(Disclaimer - I've used and written about Credit Karma. I have no business relationship with them, my articles are to help readers, and not paid placement.)

mhoran's response is in line with my thinking. His advice to use the card to build your score is what the zero-credit folk criticize as "a great debt score." Nonsense. If you use debt wisely, you'll never pay interest (except for a mortgage, perhaps) and you may gain rewards with no cost to you.

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    Joe, somewhere you wrote about how it is not good to pay your credit card balance off too early; search as I might, I couldn't find that statement from you. Any help on that is appreciated. (I tend to pay whatever balance hits the card a mere days after I used it, so I think I am in arrears on this one and want to understand the hit I might be taking from paying it off too soon.)
    – Chelonian
    Commented Aug 1, 2013 at 3:05
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    @Chelonian It's not good to pay it off early if it means that you have 0% utilization when the final statement is posted, since that's a ding on your credit score. @ Joe I think the article Chelonian is referring to is Too Little Debt, but correct me if I'm wrong; I haven't been reading your blog for more than few months so I don't have all of the subjects memorized. Commented Aug 1, 2013 at 3:18
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    @Chelonian I think it helped that in a recent answer, I linked to an answer Joe posted that referenced that exact post, so it was fresh in my memory. Commented Aug 1, 2013 at 3:35
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    @JohnBensin and Joe: I'm going to try to implement this now, but I realize I am unclear as to how to know how long to wait. I view my credit card account/balance online, and if I buy something today it will show up on the balance immediately, but it is not yet "on the statement", I guess, and so paying it now is paying too soon for this tactic. Any general advice on how to time this right, or should I just try to inquire through my credit card company?
    – Chelonian
    Commented Aug 4, 2013 at 18:11
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    How about waiting to see the bill and paying it in full? You need to pay attention to not exceed your credit line, or ideally 20% of the line. In the end, you should minimize your effort, unless you have great rewards, there's no point in pushing every last expense through the card. Commented Aug 4, 2013 at 19:56

Regardless of how it exactly impacts the credit score, the question is does it help improve your credit situation? If the score does go up, but it goes up slowly that was a lot of effort to retard credit score growth.

Learning to use a credit card wisely will help you become more financially mature. Start to use the card for a class of purchases: groceries, gas, restaurants. Pick one that won't overwhelm your finances if you lose track of the exact amount you have been charging. You can also use it to pay some utilities or other monthly expenses automatically.

As you use the card more often, and you don't overuse it, the credit card company will generally raise your credit limit. This will then help you because that will drop your utilization ratio. Just repeat the process by adding another class of charges to you credit card usage.

This expanded use of credit will in the long run help your score.

The online systems allow you to see every day what your balance is, thus minimizing surprises.


I always hesitate to provide an answer to "how does this affect my credit score?" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores.

To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.)

However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit.

Since this is so unusual, this is just an educated guess.

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    Quick question: how do we know the OP isn't using a large percentage of his/her credit? A "couple hundred dollars positive balance at all times" could amount to high credit utilization if it's his/her first card with a low credit limit. I knew people in school who had limits of $500 on their credit cards. Commented Jul 31, 2013 at 14:21
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    "positive balance" sounded like OP is paying in advance. I hope he confirms this. Commented Jul 31, 2013 at 14:23
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    When he means "positive balance", he really means a "negative balance", meaning that the credit card company actually owes him money. As @JoeTaxpayer says, this actually isn't great for credit score, but it definitely means he isn't using a high percentage of his credit. Commented Jul 31, 2013 at 14:24
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    @DavidOgren That's what I was questioning the OP about in my first comment (under the actual question); that's what I thought, but I wanted to make sure because usually people don't confuse positive and negative signs when talking about amounts greater than a few pennies. Commented Jul 31, 2013 at 15:09
  • To clarify, I have a negative balance on my card at all times, and thus am using 0% utilization.
    – Chael S
    Commented Aug 4, 2013 at 7:37

AIUI credit cards report three main things.

  1. Utilisation, how much of your available credit you are using. Best is low but nonzero. Zero is ok but not the best. However utilisation only has a short term impact on your score, "utilisation history" is not a thing.
  2. Age of accounts, the longer you have had your accounts the better.
  3. Whether or not you are paying your bills. Payment history has a longer term impact. Paying your bills correctly is good, failing to do so is bad.

The potential problem with your strategy is that by pre loading you never actually get a bill and so your provider may not report your payments.

Better to wait until the bill comes and then pay it in full. That ensures that your use of the card is properly reported.

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