Question

You have four credit cards. Each has a balance of $950.00, but their credit limits are $1,200.00, $2,200.00, $2,400.00, and $3,000.00. Paying off and closing which card would decrease your debt ratio?
(1 point)
Responses

$3,000.00 limit
$3,000.00 limit

$2,200.00 limit
$2,200.00 limit

$1,200.00 limit
$1,200.00 limit

$2,400.00 limit

Answer 1

$1,200.00

Reason: Initial utilization = 3800/8800 = 43.18%. If you pay off and close the $1,200 card: new utilization = 2850/7600 = 37.5% (decrease). Closing any larger limit either leaves the ratio the same ($2,200) or increases it ($2,400 or $3,000).