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Beware of Credit Card Issuers and Bad Advice

The new federal Consumer Financial Protection Bureau is asking consumers to air their credit card grievances. Here's my complaint: Please stop giving customers false information and advice.

Last week I called my credit card company's customer service number to change my billing address. As I was about to get off the phone, the representative asked me if I use my Visa for all of my everyday purchases. (This must be the credit world's equivalent of inquiring if I'd like to supersize my meal.) Although I should have just let the question go, I couldn't help but answer her. I said that I was in the process of applying for a mortgage and wanted to do everything I could to maintain my healthy credit score. As a result, I said I'm trying to use more cash so I can keep my credit utilization ratio low.

(Your credit utilization ratio is the amount you spend each billing cycle versus your total line of credit and makes up 30% of your total credit score. Folks with the highest scores use no more than 30% of their card's line of credit.)

The customer service rep told me not to worry. I could throw down my credit card as much I wanted. My credit utilization ratio would not be affected by my spending as long as I pay off my balance at the end of the month. Really? I decided to call consumer education website,, to find out if that was true.

It turns out I got some bad advice from my credit card issuer. According to, it does matter how much you spend. That's because your credit utilization ratio is based upon whatever your balance is on the day your lender reports your data to the credit reporting bureaus, says Tom Quinn, consumer credit export for And that could be at any time during your billing cycle, he says.

With this in mind, if you know you're going to make a major purchase in the next few months, such as buying a home or a car, it's a good idea to do everything you can to keep your credit score high and your credit utilization ratio low. In my case, he recommends I stick with cash or use a debit card for my everyday purchases, despite my bank's advice.

Have you received misinformation from your credit card company?

Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
Tk image courtesy of Flickr, CC 2.0.
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