How to maintain low credit utilization while maximizing cashback

Credit card holders can increase the total amount of purchases and the amount of cashback rewards they receive while maintaining low credit utilization by paying the card balance after every purchase rather than once per month. Credit utilization - what percentage of your credit limit you borrow - accounts for 30% of FICO credit scores. Credit utilization should not exceed 30% to maintain a good credit score and should be at most 10% for an excellent score. Student credit cards offer low initial credit limits which limit the amount you can spend before having high utilization. For example, the initial credit limit for a Discover card is $1000. To maintain 10% credit utilization, one can only have $100 outstanding at a time. Credit cards have a feature called cashback where the card issuer gives you a percentage of the fee they charge merchants as an incentive to use the card. Paying with a credit cards is advantageous anytime the merchant does not charge a fee or their fee for credit cards is lower than the cashback amount. By paying off the balance after each purchase rather than once per month, the account’s credit utilization is determined by the maximum purchase amount rather than the total monthly spending.