Is it better to spread out my credit card debt so that each of my cards is at around 30% of my limit or is it better to consolidate it all to just one or two cards even if these end up being at close to 80-90% of the limit?

Assume the interest rates in question are the same.

FYI this is more of a hypothetical question, kind of a pro/con for one choice over the other.

Better to keep track of, better for late payments, better for credit score, better for negotiating rate decrease, better for negotiating credit increase, better if I die, etc...

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    Better in what respect? for your credit scrore? for you to keep track of? I think you need to explain your context for 'better' in order to be sure you get applicable answers – Chuck van der Linden Jul 16 '11 at 5:25
  • @Chuck van der Linden, all of those cases. Better to keep track of, better for late payments, better for credit score, better for negotiating rate decrease, better for negotiating credit increase, better if I die, etc... – Justin Ohms Jul 16 '11 at 17:44

There's a different reason to have more than one credit card. (If you have three, that's probably enough.)

Someone can get access to your account number, and start making fraudulent charges. When you report this to the issuer, they cancel your account to prevent further charges. They send you a new one, but there's a delay.

This happened to not one, but two of our credit cards at the same time. Thank goodness we had a third one that we could use in the meantime.

If we had had just one card to use, we'd be cash only until the new cards arrived, which would have been a big inconvenience because we were used to using our card for everything. (It was inconvenience enough tracking down all of the automatic bill payments we had on the cards that were compromised.)

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    get an Amex. When my card was stolen, I got a new one the next day with overnight delivery. For free. For my Chase Visa that was stolen in the same wallet it took more than a week to arrive. +1 for making the point. – littleadv Jul 18 '11 at 18:09

It's better to not maintain a balance on credit cards at all, pay them off entirely. You'll come out way ahead that way compared to paying interest at what are often stupidly high rates.

in some situations, a large amount of available but unused credit can be seen as a risk, in that case, fewer cards can be better.

However, closing an old established account, or maxing out a credit card can both lower your credit score. So if you are consolidating don't consolidate too much, and don't close the cards you've had the longest.

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    yes, we all know it is better to not carry a balance on credit cards, that wasn't my question. I also didn't mention anything about closing any accounts. Question is simply about distribution of a given amount of debt across several accounts in relation to their limits. – Justin Ohms Jul 16 '11 at 17:51
  • part of your question included consolidating debt from several cards to a few cards, when people do that, they often close some of the accounts they have paid off, hence the advice regarding not closing your oldest accounts if you care about the credit score. – Chuck van der Linden Jul 17 '11 at 9:04

Debt to credit ratio is for all of your accounts, not each of them separately, at least from the credit score perspective, so if you're concerned with the score - the ratio of all your revolving debt and all your revolving credit should be 30%.

The consideration which card to use for the debt should be based on the APR - the higher the APR the less debt should there be. Optimally you'd want to consolidate all the debt with the lowest rate possible.

It goes without saying of course that keeping debt on your credit cards is a bad idea, it's one of the most expensive loans possible. Consider taking a personal loan at a bank, or peer lending group, at a lower rate and move all the debt there. Alternatively, if you can get a new card with an intro low APR for a significant period of time (make sure to read the fine print, there are fees for balance transfer), consolidate there. Once done that make sure no more new debt builds up on your credit cards, pay them off every month in full.


Spreading a significant balance around will usually make it harder to payoff. If your balances aren't insane and your payment history is good/excellent, you should be able to get an increase in credit line so that you aren't at 90% utilization on that account.


When it comes to your credit score, lower balances on each card is the better way to go, although credit utilization will be measured across all your accounts and be relative.

As far as paying them off, I'd recommend moving all of them to one card via a 0% APR balance transfer.

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    +1 because the goal is to get the lowest interest rate on the money. – MrChrister Jul 18 '11 at 20:38
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    As long as up-front fees to perform a balance transfer aren't exorbitant. Such fees can be a wolf in 0% APR sheep's clothing. – Chris W. Rea Jul 19 '11 at 0:21

Actually its better to maintain a small balance on a credit card and keep paying it off regularly in full.

The RATIOs are more important (weigh more to the calculation of your credit score) than how many cards you have.

So consolidating and nearly maxing out a card is worse.

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    No, this is absolutely, positively wrong. Maintaining a balance on your cards has ZERO impact on your credit score or other measure of credit quality. – duffbeer703 Jul 17 '11 at 16:47
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    Paying off regularly always increases your credit score. If you ever get your credit checked (which lowers your score) which can happen by applying for a new cell phone, renting a car, applying for a job, instant approval store credit - then paying off a minimum on another line of credit will offset that credit check. Thats the purpose of maintaining a balance on the card. – RD. Jul 17 '11 at 19:44
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    By using your card regularly, you will have a balance. You will not pay interest on that balance if you pay in full. Using your card regularly and responsibly will keep a healthy score. Paying interest on a balance does not help in any way. Revise your answer and I will +1 you. – MrChrister Jul 18 '11 at 20:40
  • revised the answer – RD. Jul 19 '11 at 2:55

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