Your credit card balance is the amount of fees you owe to your credit card company. It is the accumulated amount that you have borrowed but not yet paid back. Every purchase, balance transfer, and cash advance you make increases your credit card balance. Fees and interest also increase your credit card balance. On the other hand, payments and returns all reduce your credit card balance. Your credit card balance may also be negative if you overpaid your credit card or had a credit credited to your account after you paid your balance in full.
It is important to be careful about your credit card balance so that you don't let it get out of control and keep it at a reasonable level (or fully paid).
Why have a good credit card balance matters
Maintaining a good credit card balance is important for your credit score and overall financial health. A high credit card balance can hurt your credit score, especially if you use a large percentage of your credit limit.
A high credit card balance also affects your credit card balance. The higher your credit card balance, the higher your minimum payment. That means you have to assign to this credit card every month.
Carrying a high credit card balance means fewer credits available for procurements. If you carry a high credit card balance, it is important to keep it available with your credit so that your credit card is not denied.
What balance is good for your credit score
Each of your credit card balances directly affects your credit score. A good credit card balance is less than 30% of your credit limit. For example, if you have a credit card with a $ 100 credit limit, the balance should be less than $ 30. It's best to have a zero balance.
Logistically speaking, it is hard to keep your credit card balance at $ 0 if you ever plan to use your card. However, you can be sure that your credit report shows a zero balance by paying off your credit card before your bank statement submission deadline. That is the current credit card issuer typically reporting your credit card details to the credit bureaus.
Credit score aside, a good credit card balance is one that you can afford to repay. Since the best way to control credit card debt is to pay off the balance every month, you should never collect more than your monthly disposable income. This is the amount of your income for expenses after taxes and expenses have been paid.
Are Your Credit Hurting Your Credit Score?
You can determine whether credit card balances can be said by calculating your credit usage to affect your credit score. This number shows the ratio of your credit card balance to your credit limit.
Start by making a list of all of your credit cards. Write down the credit limit and the balance of each credit card (this information can be obtained by using your online checking account or the customer service number on the back of your credit card for calls). Then for each credit card, you divide the credit card balance by the credit limit. Multiply by 100 to convert the answer to a certain percentage.
Any credit cards with balances over 30% could affect your credit score. Work to reduce these balances for a better credit score.
How to maintain a good credit card balance
Your credit card balances can get out of control if you spend thoughtlessly without checking if your credit is getting closer to the credit limit. Create a habit of constantly checking your credit card balance, at least once a week, to make sure that it is no more than 30% of your credit limit. You can easily do this from your smartphone to log your credit card issuers by downloading or logging into your account from your mobile internet browser.
As the balance grows larger, you can make a payment to bring balance. Or, if you can't afford to pay off a significant portion of your credit card balance, your credit card stops while until you reduce your balance to a better level.