You should use less than 30% of a $500 credit card limit each month in order to avoid damage to your credit score. Having a balance of $150 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.
If you want to go beyond just avoiding credit score damage and instead improve your credit score as quickly as possible, the best way to do that is to charge around 1% to 10% of your credit limit each month, then pay it off in full by the due date.
How Much of a $500 Credit Card You Should Use
- Rule of thumb: Less than $150 (30% of credit limit)
- Ideal usage: $5 to $50 (1% to 10% of credit limit)
- Safest option: You can use 0% of your credit limit and still have it improve your credit score. Your score will improve more slowly than it would if you charged a small amount each month and paid the bill in full by the due date, though.
Regardless of how much you use your credit card in a month, what really matters is how much of your credit limit is still available when your monthly statement closes, as that’s when the card’s issuer reports your balance to the credit bureaus. The balance divided by your credit limit then multiplied by 100 is your utilization percentage. Your credit score will take into account both your utilization on each credit account and your overall utilization between all your credit accounts.
Once you receive your credit card statement each month, it’s best for your credit score if you pay your full remaining balance on time and in full, if possible. This will help keep your utilization low the next month.
To get graded on your credit utilization as well as receive personalized advice on how to improve, you can join WalletHub for free and check out the Credit Analysis portion of your account.
This answer was first published on 07/24/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
You should use less than 30% of a $500 credit card limit each month in order to avoid damage to your credit score. Having a balance of $150 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.
How much should I spend on a $500 credit card limit? ›
What's Your Credit Card Balance To Limit Ratio?
| Credit Limit | Fair Utilization (40%) | Good Utilization (30%) |
|---|
| $250 | $100 | $75 |
| $500 | $200 | $150 |
| $2,000 | $800 | $600 |
| $3,000 | $1,200 | $900 |
1 more rowAug 16, 2023
Answer: 30% of 500 is 150.
What is the minimum payment on a $500 credit card? ›
Percentage method: Some credit card issuers calculate the minimum payment as a percentage of your outstanding balance. This percentage typically falls within the range of 1% to 3% but can vary. For example, if your outstanding balance is $500 and the minimum payment percentage is 2%, your minimum payment would be $10.
How to use a credit card with $500 limit? ›
Keep your utilization low (30% of your FICO score)
For example, if you're carrying a $150 balance on a credit card with a $500 credit limit, that's 30% utilization. Utilization is calculated for both each individual card and across all your credit cards as a whole.
Is a 500 dollar credit limit bad? ›
Many starter credit cards have credit limit ranges between $200 and $1,000. In that case, you could consider a limit of $500 or more to be a fairly good starting limit. However, the best credit limit for your first card is one that you can pay back on time each month as you spend with your card.
Is it bad to have too many credit cards with zero balance? ›
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
What is 20% on $500? ›
∴ 20% of 500 is 100.
How much is 70% out of 500? ›
The value of 70% of 500 is 350.
Does 0 utilization hurt credit score? ›
While a 0% utilization is certainly better than having a high CUR, it's not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score.
A credit limit of $500 is also lower than the average credit card limit. Keep in mind that even if you start off with a $500 credit limit, that's not necessarily the limit you'll have forever. After six consecutive months of on-time payments, you might qualify for a credit limit increase.
Is a 500 credit card good? ›
A $500 credit limit is good if you have fair, limited or bad credit, as cards in those categories have low minimum limits. The average credit card limit overall is around $13,000, but you typically need above-average credit, a high income and little to no existing debt to get a limit that high.
Does my credit card refill every month? ›
Does Your Credit Card Limit Reset Every Month? Every time you make a payment to your credit card account and that payment is credited to your account, it will reset your credit limit. So if you make a payment every month, then it will reset your credit limit monthly.
How can I increase my $500 credit limit? ›
How can I increase my credit limit? Call your card issuer at the number on the back of your card to request a credit limit increase. You'll need to provide your current income and possibly your monthly housing payment. Some card issuers also allow you to request a higher credit limit online.
What is a good beginner credit limit? ›
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.
What is the max you should use on a credit card? ›
Experts generally recommend maintaining a credit utilization rate below 30%, with some suggesting that you should aim for a single-digit utilization rate (under 10%) to get the best credit score.
Can I rent a car with a $500 credit limit? ›
So if you have a $500 credit limit and the rental company puts a $300 hold on your card, you only have $200 in available credit. Trying to charge more than your available credit line during your trip could result in an overdraft or declined transactions, which could put a big damper on your plans.
How much should I spend on my credit card if my limit is $1000? ›
How much should I spend if my credit limit is $1,000? The Consumer Financial Protection Bureau recommends keeping your credit utilization under 30%. If you have a card with a credit limit of $1,000, try to keep your balance below $300.
What is the 30 rule for credit cards? ›
This means you should take care not to spend more than 30% of your available credit at any given time. For instance, let's say you had a $5,000 monthly credit limit on your credit card. According to the 30% rule, you'd want to be sure you didn't spend more than $1,500 per month, or 30%.
