According to a survey conducted on May 2018, the average interest rate on new credit cards rose to a whopping 16.71 percent. This means that carrying a balance on a credit card can be expensive.

On top of that, a penalty interest charged on the card can make your payments even higher. Continue reading to learn more about carrying a credit card balance.

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How Does Carrying a Credit Card Balance Affect Your Credit Score?

Carrying a credit card balance doesn’t affect your credit score. The factors that are considered when calculating your FICO credit score include your payment history, the length of your credit history, the amounts you owe, your credit mix and the amount of new credit you’ve opened. Therefore, holding a credit card balance, isn’t even considered.

Knowing this, do not keep a balance on your credit card thinking it will boost your credit score. Instead, try to pay off the balance on your card to help cut down your debt and fix your credit score.

What Are the Benefits of Carrying a Balance?

Nowadays, competition in the credit card market is intense with many companies fighting to offer the best introduction deals with 0% APR on all purchases. Additionally, you may want to consider 0% APR balance transfer credit cards if you have high balances on your other cards.

If you can get a card with 0% APR, you can take advantage of the intro period and carry a balance. Keep in mind, however, that once that intro period ends, your interest payments begin, so make sure you pay off your balance beforehand.

What Are the Consequences of Carrying a Balance?

Carrying a balance on your credit card will result in it only growing. Interest rates are often in the double digits, so your debt can start to grow out of control if you don’t handle it as soon as possible. Instead of paying the interest that starts to grown on your balance, use that money to pay off your balance.

Bottom Line

If you have a 0% APR credit card offer, then you’ll be able to carry a balance on the credit card without any negative implications. Still, you should try to pay off the balance by the time the intro period ends.

If you do have a large balance to pay off, start by looking for a 0% APR credit card with no balance transfer fee and make a balance transfer to it. For more post like this, check out our list of bank guides!

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