# TDS calculation for credit cards with no balance



## financialnoob (Feb 26, 2011)

I was wondering how the credit card debt is factored into TDS calculations if there is no balance.

For example, I have a Visa with a $2,000 limit, but I never carry a balance. I put a few hundred dollars on it every month and pay it off right away. The TDS calculators always ask for credit card debt, but it seems this is the minimum payment on an outstanding balance. Or is it a minimum of your overall limit, which I thought I read at one point but can't recall now?

I'm also thinking about getting a Mastercard for rewards that I can't get at certain places they don't accept Visa, and I'm wondering how that will impact future TDS calculations.


----------



## MoneyGal (Apr 24, 2009)

If there's no balance, there's no debt. Does that help?


----------



## the-royal-mail (Dec 11, 2009)

Whenever lenders pull up your stats they can see the "balance" on the account of say $321.55. No matter when you look at my statement there is always some balance or other. By the time the bill date comes up and is paid, more charges have been incurred on the card that are due the following month etc. It's never at zero.


----------



## Shayne (Apr 3, 2009)

financialnoob said:


> I was wondering how the credit card debt is factored into TDS calculations if there is no balance.
> 
> For example, I have a Visa with a $2,000 limit, but I never carry a balance. I put a few hundred dollars on it every month and pay it off right away. The TDS calculators always ask for credit card debt, but it seems this is the minimum payment on an outstanding balance. Or is it a minimum of your overall limit, which I thought I read at one point but can't recall now?
> 
> I'm also thinking about getting a Mastercard for rewards that I can't get at certain places they don't accept Visa, and I'm wondering how that will impact future TDS calculations.


If you don't carry a balance and you can prove you pay it monthly it won't effect your TDS at all.

Lenders will us a payment of 3% of your balance on credit cards for TDS calculations. Ie $500 balance would mean a $15 payment in the calculations.

Most of my clients debt service with the balance on their cards. If things are tight and they do pay them every month I just provide statements showing the balance paid in full monthly so it doesn't affect their TDS at all.


----------



## Sampson (Apr 3, 2009)

the-royal-mail said:


> It's never at zero.


Yes, and the lenders will tack this onto the total debt, even if is just a temporary snap shot. In more than one instance of trying to secure a mortgage, the lenders questioned the credit card balance (even though I've never paid a cent of interest).

The timing was unfortunate because I think we had just spent a $5-$10k on something. Ultimately, we just paid off the card, showed them evidence of this, and they were happy.


----------



## financialnoob (Feb 26, 2011)

Thanks everyone. I think I will go ahead and get that second card then. I can imagine it adding another $100-$200/month on the new card, which will be paid in full.

It's very helpful to also know you can use your payment history with lenders to show the balance is $0. I didn't want to have to cut back on spending on the CCs a few months if we decided to buy a place.


----------

