Should You Carry A Balance to Establish Credit?

Some of the links in this post are from our sponsors. Read our disclosure to see how we make money.

carry a balance

We’ve all been on the receiving end of financial advice, whether it’s from a parent, a friend or a colleague, but what happens when that advice isn’t exactly the best? What happens when it’s just plain wrong?

I’ve been collecting a list of not-so-great (okay bad, really bad) financial advice that other personal finance enthusiasts have heard the past couple of years. Some of it comes with the best intentions, but I think it’s important to set the record straight.

Even Bloggers Get Bad Advice


Erin from Journey to Saving gave me an example of one such piece of advice about why she should carry a balance on her credit cards that her friend gave her. Now, again, I’m sure that it came with best intentions, but it just goes to show that some money myths can be especially pervasive over time.

This one myth in particular is the old idea that carrying a balance – however small – on your credit card is a good thing to do to improve your credit score. The (flawed) idea is based on the notion that carrying a balance shows you’re actually using the card.

Erin’s friend isn’t the only one to think this. In fact, there was a Huffington Post article about the same topic just two years ago. In that article, experts stated that “you get no reward from keeping even a small balance on your card.”

In fact, when it comes to carrying balances, really the opposite is true. If you have a balance, it could affect your credit score negatively.

My friend Carrie Smith put together a great slideshow that explains how credit scores are determined. In it, she says you should only use 30 percent or less of your total credit availability. Any more than that means lenders will not look kindly on your history. At the same time, she explains that, “carrying a balance doesn’t mean you’re a high risk borrower.”

What Really Matters About Your Credit Score


What’s really most important when it comes to your credit score isn’t your balance. It’s actually your payment history, which makes up a whopping 35 percent of your score. A late payment will hurt you far more than will the decision to carry a balance, so while the total number on your card balance is important, what’s far more important is that you’re actually paying it on time every time.

Luckily, Erin said she never carried a balance of more than $100, and once she realized this advice was not accurate, she started paying it off. She also made a great point that  “it’s not wise to leave a balance, especially when you’re just starting out! That’s because your credit limit will be paltry, and it won’t take much to max it out. If my limit was only $750, leaving a balance of $100 or less every month looked pretty bad (as opposed to someone with established credit that has a limit of $25,000).” So, take into account how much credit you actually have before you decide to leave a balance at all.

As many of you know, we advocate paying off cards in full every month here at Frugal Rules. I personally had $6,000 worth of credit card debt three years ago, and I started paying it off by getting my first writing job online. I paid off the balance using side hustle money in 18 months, and then I loved writing online so much, I decided to make it my full time job. 🙂

If you are struggling with credit card debt, don’t believe some of the myths surrounding credit history and balances. Do your research, use trusted sources, and by all means ask us for help if you need guidance or support in your journey to keep your credit score high and your credit card balance empty.


What’s the worst piece of financial advice you’ve ever received? What are some ideas you once held about credit cards that you don’t anymore? Do you carry a balance on your credit cards?

The following two tabs change content below.
Catherine Alford is the go to personal finance expert for parents who want to better their finances and take on a more active financial role in their families.