A high credit card balance could negatively impact your credit utilization ratio. And a high credit utilization ratio could negatively impact your credit scores. That’s why the CFPB recommends keeping your credit utilization ratio below 30%. Your credit card balance is the total amount of money you owe your credit card issuer. That amount may include purchases and other transactions made with the card, plus interest and fees.
If your balance is too high to pay off quickly, you may want to consider a balance transfer. This means moving your balance to a new card that offers a 0% interest rate for a set period. According to recent financial studies in early 2025, the average credit card balance in the U.S. is around $6,618. With rising interest rates, more people are finding it harder to pay down these balances.
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You don’t need to wait for your monthly statement to arrive — sometimes, making a payment early is the best time to pay your credit card bill. To avoid credit card debt and to establish and help you maintain a good credit score, it’s important to understand and stay on top of your credit card balance. If you’re carrying high-interest credit card debt, transferring the balance to a lower- or no-interest card can save money on interest—meaning you’ll pay off your debt sooner. Having a negative balance on your credit card means you’ve paid off more than the balance on your card.
- For instance, you can find free entertainment options at the library instead of using a streaming service.
- You’ll want to pay your full credit card balance after you receive your statement but before the due date.
- Every other month, my Discover it Chrome gives me a balance transfer offer, and over the years, I’ve taken advantage of great offers for a 0% annual percentage rate.
- If you don’t pay your credit card bill on time and in full each month, whatever’s left (the unpaid balance) gets carried over to the next billing cycle.
- If you prefer a phone call, you can dial the number on the back of your credit card to contact your credit card issuer directly.
This lowers the balance that gets reported to the credit bureaus. These numbers show that the cost of carrying a balance is getting more expensive over time. That’s why it’s important to know what is a credit card balance and how to keep it low.
To keep your credit card in good standing, pay this amount or the minimum payment listed on the statement. If you pay off the statement balance each month, you avoid paying interest on your purchases altogether. The statement balance does not include any charges incurred or payments made on the credit card after the statement closing date. You’ll want to pay your full credit card balance after you receive your statement but before the due date. You want to show that you’re using your credit responsibly without carrying a balance month-to-month.
Is it OK to carry a credit card balance?
Both factors contributed to my credit score, and over the next several months, I saw my credit score increase. That may depend on a few factors including your financing requirements. It can also depend on how many credit cards you have and their balances. It may also depend on your total available credit limit, that is, how much credit you have available across all of the cards. The percentage of your total available credit that you may have used is known as your credit utilization ratio, and it may be a good idea to keep this as low as possible. Instead of shuffling debt between credit cards, you’re taking out an installment loan with fixed monthly payments over a set period, which can vary but is typically between two and seven years.
The minimum payment indicates how much you have to pay the credit card issuer to avoid getting reported for a late or missing payment. This payment also keeps your credit card in good standing, but interest still accumulates on the remaining balance. A high balance will bring down your credit score because it generally corresponds with a high credit utilization ratio, but that’s not the only factor that can hurt your score.
- Deposit products and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.
- When people forget or can’t afford to pay their full statement balance, they begin to see interest charges.
- Morgan Wealth Management Branch or check out our latest online investing features.
- Or you can call your credit card company and ask them to send you a check for the amount of the credit balance.
All users of our online services are subject to our Privacy Statement and agree to be bound by the Terms of Service. Reviewing your balances could also make it easier to spot unusual activity on your account. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. View today’s mortgage rates or calculate what you can afford with our mortgage calculator.
Depending on your outstanding balance and total statement credits, you could end up with a negative credit card balance. For example, if you have a $100 balance and receive a $200 refund, you’ll have a negative balance of $100, which future charges would reconcile. Many credit cards offer a grace period, typically 21 to 30 days, between the end of a billing cycle and the payment due date. During this period, interest is not charged on new purchases if the entire statement balance is paid in full. This grace period applies only to purchases and not to cash advances or balance transfers, which incur interest from the transaction date. It’s a common myth that carrying a balance on your credit card will help you build credit because card issuers earn money on your interest payments.
It gives you a clear repayment plan and deadline, which can help you stay focused. Both options can be helpful if you’re serious about paying off your credit card balance. Several factors contribute to the total amount of your credit card what is credit card balance balance.
Another option was to request a balance transfer check from your issuer and write a check to the debtor. At the time of writing, Chase and American Express are the only major issuers that don’t allow transfers of non-credit-card debt. Now that we’ve answered what is a credit card balance, let’s look at why it matters.
