Governor Gavin Newsom announced on Thursday an agreement that requires all California high school students to take a semester-long personal finance education course starting by the 2027-28 school year.
If you have a credit card with a $25,000 limit, that limit counts against your total even if you are not using it. For example, if it is determined that you can sustain mortgage debt of a maximum of $400,000 at current interest rates, you will not qualify for that amount because you also have an open credit card with an available balance of $25,000 at a significantly higher interest rate.
EDIT: You can only decrease what you owe on a loan but a credit card is an open line of credit that you can max out at any time. Because of this, the entire credit line counts against you when evaluating your debt.
You can only decrease what you owe on a loan but a credit card is an open line of credit that you can max out at any time. Because of this, the entire credit line counts against you when evaluating your debt. If you have any questions, ask your local bank manager or financial advisor.
EDIT: By the way, most people also believe that only the outstanding balance is counted.
You fully missed the point. If you read comments around credit cards you’ll see that most people don’t understand the impact of credit cards on their ability to borrow. Yes, if you do not need five cards or $25,000 credit limit (or both), then you should absolutely start closing cards and reducing limits. People don’t understand that. They go buy a car and the loan rate is through the roof. They think that is how it is and never imagine that the rate might have been triggered by the three unused credit cards.
IMHO, you should always have one credit card with a limit just slightly higher than your monthly burn rate. You should use it instead of debit cards, and you should pay it off in full, automatically, every month well before it is due. Only one credit card. Again, just my opinion.
If you have a credit card with a $25,000 limit, that limit counts against your total even if you are not using it. For example, if it is determined that you can sustain mortgage debt of a maximum of $400,000 at current interest rates, you will not qualify for that amount because you also have an open credit card with an available balance of $25,000 at a significantly higher interest rate.
EDIT: You can only decrease what you owe on a loan but a credit card is an open line of credit that you can max out at any time. Because of this, the entire credit line counts against you when evaluating your debt.
Do you have a source for this? My understanding was only credit card balances mattered.
You can only decrease what you owe on a loan but a credit card is an open line of credit that you can max out at any time. Because of this, the entire credit line counts against you when evaluating your debt. If you have any questions, ask your local bank manager or financial advisor.
EDIT: By the way, most people also believe that only the outstanding balance is counted.
Then decrease your limit, LMAO. It’s not that hard
You fully missed the point. If you read comments around credit cards you’ll see that most people don’t understand the impact of credit cards on their ability to borrow. Yes, if you do not need five cards or $25,000 credit limit (or both), then you should absolutely start closing cards and reducing limits. People don’t understand that. They go buy a car and the loan rate is through the roof. They think that is how it is and never imagine that the rate might have been triggered by the three unused credit cards.
IMHO, you should always have one credit card with a limit just slightly higher than your monthly burn rate. You should use it instead of debit cards, and you should pay it off in full, automatically, every month well before it is due. Only one credit card. Again, just my opinion.