Not paying off your cards at the end of the month can hurt your credit score and cost you more money.

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Most Americans don’t know that they’re ruining their credit.

Pollsters recently asked 1,000 Americans if “it helps your credit score to carry a small balance on your credit card each month.”

The survey conducted by LendingTree, one of the oldest online lending marketplaces, found that 65 percent of respondents believe this common misconception about credit. But here’s the cold, hard truth: it can torpedo your credit score and leave you responsible for the interest on the balance.

“This is the cockroach of credit-scoring myths – it just absolutely will not die,” said Matt Schulz, chief credit analyst at LendingTree. “The myth hurts cardholders because it costs them money. If they’re only carrying a small balance, it may not cost them a huge amount of money, but over time, it adds up.”

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Separating financial fact from fiction

Carrying a credit card balance from month to month can affect your utilization rate, which is the second most influential factor in your credit score.

Your utilization rate is how much credit you use compared to the credit you can access (i.e., your credit card limit). Maxing out your credit card is never a good idea. Companies that look at your credit report will think you’re struggling financially and might not trust you because of it.

Always try to keep your credit utilization under 30 percent.

Find out: What Factors Affect Your Credit Score

“Maxing out a card sends your credit utilization rate – or how much debt you have compared to your available credit – soaring,” Schulz said. “And when you’re struggling to pay down your current debts, issuers may become less likely to want to lend you more money.”

A better plan of action would be to put smaller purchases on your credit cards and pay off the debt at the end of the month.

Misinformation can lead to massive consequences

LendingTree also found that 35 percent of Americans don’t actually know their credit card’s interest rate. Not a big deal if you’ve been clearing your debts every month. Huge deal if you’re part of the nearly 50 percent that don’t.

Not only do half of the survey respondents carry over their credit balance, but they also made at least one late credit card payment – another good way to destroy your credit score.

Find out: 5 Steps to Improve Your Credit Score in 2022

“A single payment that is 30 days or more late can devastate your credit, making your score fall 50 to 100 points, depending on your individual circumstances,” Schulz said. “Once that is disrupted, the consequences are massive.”

Ideally, you should check your credit report at least once a year, twice if you’re able to. But nearly 3 in 10 people haven’t checked in the last six months.

Find out: How to Get Your Free Annual Credit Reports Securely

To avoid getting sucked into more debt than you can handle, make sure you check your score and monthly credit statements, pay off your credit in full, and always make payments on time.

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About the Author

Gillian Manning

Gillian Manning

Gillian Manning graduated from Florida Atlantic University in 2021 with her bachelor’s degree in journalism. At FAU she served as the editor-in-chief of the student-run newspaper, the University Press. During her time there, the paper saw an increase in content production, readership, and engagement. Before she even graduated, Gillian was published in various outlets such as South Florida Gay News and the Boca Raton Tribune.

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