balance on your credit cardUpdated: Oct. 11, 2018

When it comes to credit, there’s a lot of misinformation out there about what you should or shouldn’t do to keep your credit in good standing. Many of these myths revolve around credit cards. We’ve already debunked why you shouldn’t cancel your credit cards, but what about carrying a credit card balance? Learn how carrying a credit card balance can impact you and what actions you can take to rid yourself of the balance.

How does carrying a balance hurt me?

Whether or not you realize it, carrying a credit card balance can have some negative aspects. Here are some of the downsides you can expect.

It could impact your credit scores

While you may think that carrying any balance — big or small — on your credit card isn’t impacting your credit, it could actually do some major harm to your credit scores, especially if your card has a low credit limit. That’s because your credit limit and any debt you owe directly impact your credit utilization ratio, something that accounts for 30% of your credit scores. This means when your credit utilization ratio goes up, your credit scores may fall. You can calculate your credit utilization ratio by dividing your total credit used (your credit card debt) by your total available credit (your total credit limit). For example, if you’re carrying a $500 balance on your credit card with a credit limit of $1,000, your credit utilization ratio (or how much of your credit you’re using) is 50% — most lenders prefer a credit utilization ratio of 30% or lower. As you can see, the higher your credit card debts, the higher your credit utilization ratio will climb and the more impact it will have on your credit scores.

Interest will add up

Let’s face it, no one likes to pay credit card interest, and if you’re carrying a credit card balance, interest is something you can’t escape. To make matters worse, your credit card, like most others on the market, probably has a variable interest rate, which means it can go up at any time, like when the Fed announces another interest rate increase.

What can I do if I’m already carrying a balance?

If you’re already carrying a balance on your credit card(s), don’t stress because there are a couple of things you can do now to pay down your balance.

Consider a balance transfer

One of the easiest ways to rid yourself of credit card interest is to transfer your balance to a new credit card that offers a long 0% intro APR on balance transfers, giving you more time to pay down your balance, interest-free. Most balance transfer credit cards charge a fee to complete a balance transfer, which is usually 3% to 5% of your transferred balance. Even though you may want to avoid balance transfer fees completely –which is an option with some balance transfer credit cards — oftentimes the fee still makes the transfer worthwhile, since the one-time fee is usually a lot cheaper than the ongoing interest you’re paying on your current credit card. When it comes to picking a balance transfer credit card, you’ll want to make sure the card not only matches the balance transfer fee you expect to pay, but that it’s also one that offers a long enough 0% intro APR that gives you plenty of time to pay off the balance before the interest kicks in. Keep reading to learn about some of the best balance transfer credit cards we’ve reviewed, and input your transfer amount, monthly payment and credit level into our free Balance Transfer Calculator to see which credit cards are best for you.

BankAmericard credit card

carry a credit card balanceThe BankAmericard credit card has an 18-month 0% intro APR on balance transfers made within the first 60 days from account opening (with a 3% or $10 balance transfer fee, whichever is greater), which gives you plenty of time to pay down any balance. This 18-month 0% intro APR also extends to purchases, which is nice if you’re planning to make any large purchase soon. Cardholders will pay no annual fee, get no penalty APR — which means paying late won’t raise their APR — and receive a copy of their FICO score, updated on a monthly basis. The BankAmericard Credit Card is also available to those with good to excellent credit.

Citi Simplicity Card – No Late Fees Ever

carry a credit card balanceThose looking for an outrageously long 0% intro APR period will like the Citi Simplicity Card – No Late Fees Ever (a NextAdvisor advertiser), which offers a 21-month 0% intro APR on balance transfers made in the first 4 months. While you have to pay a fairly high 5% balance transfer fee ($5 minimum), this one-time fee is worth it when you consider how long the 0% intro APR is. In addition, you’ll get a 12-month 0% intro APR on purchases and pay no annual fees, no late fees and get no penalty rate for late payments. Rounding out the Citi Simplicity Card, which is available to those with good to excellent, are perks like the ability to set up your own bill payment schedule and access to a free monthly FICO score.

Discover it Balance Transfer

carry a credit card balanceThe Discover it Balance Transfer card has not only a long 0% intro APR on balance transfers, but it also earns cash back rewards, which means it’s a card you still want in your wallet long after you’ve paid off the transferred balance. To start, this card offers an 18-month 0% intro APR on balance transfers (with a 3% balance transfer fee) and a 6-month 0% intro APR on purchases — after that, the go-to variable rate applies. Next, you’ll earn 5% cash back in rotating categories each quarter you activate (up to the quarterly maximum, currently $1,500, then it’s 1% back) and 1% on all other purchases. What’s more, Discover will match all of the cash back you’ve earned at the end of your first year as a cardholder. This means if you earn $600 cash back in your first year as a card member, Discover will match that and give you a total of $1,200 back! Earned cash back rewards can be redeemed for statement credit, gift cards or instant eCertificates, an electronic deposit into any account you designate, charitable donations to select charities or a payment option at select online retailers. On top of paying no annual fee, the Discover it Balance Transfer card, which is available to those with average to excellent credit (usually a credit score of 670 or better), provides you with free monthly updates of your FICO credit score and access to Freeze it, a security feature offered by Discover that allows you to quickly and temporarily lock and unlock your card when you lose or misplace it.

Practice healthy credit card habits

Regardless of whether or not you opt to transfer your balance, you’ll want to start practicing healthy credit habits immediately, so you can avoid carrying a balance and potentially improve your credit. Those who complete a balance transfer will want to make sure they pay their balance off before the 0% intro APR expires, while those who don’t transfer their balance will want to make sure they pay as much as they can afford every month to pay off the balance quickly. Similarly, all cardholders will want to be sure they are not only paying their credit card on time, but also make sure they’re at least paying the minimum payment. Once you pay off the debt, you’ll want to only use the card for expenses you know you can afford. For example, you may consider charging your monthly cable and electric bills to your credit card, then pay them off at the end of the month. Doing this will allow you to avoid credit card debt and continue to build credit while maintaining a positive relationship with credit cards.

Visit our reviews of the best balance transfer credit cards to learn more about the cards detailed in this post and see how they compare to other cards on the market. Also, follow our personal finance blog to learn more about credit cards, credit reports and more.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.