As interest rates on new credit cards have risen in the past few years, be weary of carrying a balance on a credit card. With the addition of penalty interest, these fees can continue to add up and be hefty. However, carrying credit card balance is not always a bad thing.

In this guide we will breakdown the question of whether or not you should carry credit card balance, and in what cases you should carry over a balance

There are many factors that go into your FICO Credit score such as payment history, credit card usage, and the length of time you had a credit card. This means that carrying a balance on your credit card does not factor into your FICO Credit score.

However, you do not want to keep a balance on your card because it might be more than you can pay. By keeping your balance low and paid off in full, it will cut down the amount you owe and can help improve your FICO Credit Score.

Benefits of Carrying a Balance

Some credit card companies offer promotions such as 0% APR for a certain period of time. In instances like these, it may be beneficial to you to carry credit as it will not have any interests. This may be appealing to you if you have high balance on other cards that you need to pay off. However one thing to note is that once the grace period of 0% APR ends, the interest payments will begin. So make sure that you pay off your balance in full before the grace period is over.

Another plus of carrying over your credit card balance with a 0% APR credit card is that if you take advantage of a 0% APR on balance transfers. This means that you can transfer your balances from other cards and use those interest free for a short period of time.

Consequences of Carrying a Balance

Be weary of carrying a balance on your credit card. Often times, interest penalty rates can be very high up to 25% and as a result, your debt will increase fast. Instead of paying money on interest, you could be using that money towards your balance. In most cases, it is not good to carry a balance, and I would only recommend it if you had a 0% APR promotion.

The best way to avoid any extra fees is to pay your balance off in full. By paying your balance on time, every month, you can help build your credit history and eventually have a greater line of credit.

Should You Carry a Credit Card Balance?

It is recommended not to carry a credit card balance unless the credit card company is offering a 0% APR promotion. If the company does have a 0% APR promotion, be sure to pay your debt balance before the grace period ends.

If you do carry over balance though, you can expect hefty fees on your account that will pile up. For this reason, a credit card might not be right for you. To avoid this problem, either stick with a debit card or find a 0% APR credit card with no balance transfer fees.

It is imperative to read your credit card’s fine print and know how the card carries over a balance and what fees it may have. By knowing your credit card terms, you can save a lot of your money from annoying fees.