No. The end.Â
*receives word that I won’t be paid if I don’t write more*
Alright. Apparently, I need to elaborate on even the dumbest of credit myths.
Someone may have once told you to hold a balance on your credit card. By that, I mean instead of paying it off in full every month, you leave a small balance ticking over. Somewhere along the line, it became a common theory that it helped your credit score. It’s just not true.
The myth likely stemmed from the concept of keeping a card active to avoid it being closed. While this can be true, it’s solved by just using it once every so often or using it for a monthly subscription, like Netflix or something like that.
But a nationwide game of credit card telephone transformed that advice into “carry a balance on the card.” Insanely, as much as two-thirds of the country may still believe it, with 80% of Gen Z buying into it.
🤔 What’s the reality?
Carrying a balance means one thing: you’re paying interest. It’s also doing the opposite of what the myth suggests and hurting your credit score. As much as we don’t like the big banks, it makes no sense that they’d reward us for being irresponsible with credit. Remember, every cent of interest you pay devalues the points and miles you earn from that card.Â
💳 What should you do?
Pay it off every month. Every single month. It’s the best thing for your credit score, wallet, savings, and sanity. Treat your credit card like an extension of your cash. Never spend more than you actually have.
Now, obviously, there are exceptions. Credit cards are helpful when big purchases come out of nowhere. In these situations, try to keep the debt below 30% of your available credit and prioritize paying it off.
Use payment plan tools within your credit card account if you're in a pinch. These will offer you a fixed monthly payment with a smaller fee than the equivalent interest.
Also, do your part and correct people when you hear this. Start the revolution!
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