Do you keep a balance on your credit card in the hopes it will keep your credit high or help it?
Turns out it may be costing you and others millions, according to a new report from CreditCards.com. Out of 5 criteria that help maintain a healthy credit score, carrying a balance is not one of them. The closest one is whether you have reached your spending limit or not.
The average American has a balance of $6,375 in credit cards, according to Experian. The national average APR is over 16%. Can you imagine the amount of interest that is being paid while trying to achieve or maintain a healthy credit score?! That money can be used elsewhere or saved since it is keeping a balance does not really help.
What is important as well is making sure to pay your bill on time. Paying your credit card on time makes up a big chunk of your credit score. Over 40% have paid a bill late, with two thirds of those not having a great reason for doing so. This goes for those who do not have money as well as those who are high earners. The difference between the two is one couldn’t afford to pay on time while the other group would consider themselves careless.
The best way to improve your credit score or maintain a healthy one is to pay your bill on time and in full every month. Consider autopay to prevent missing payments as well.