What is what does it mean to carry a balance on a credit card?

Carrying a balance on a credit card means you haven't paid off your entire statement balance by the due date. Instead of paying the full amount, you only pay a portion of it, or sometimes just the minimum payment. Here's a breakdown of what that entails:

• Interest Charges: When you carry a balance, you'll be charged interest on the remaining unpaid amount. This is essentially the cost of borrowing the money from the credit card company. Interest rates on credit cards are typically quite high, so carrying a balance can be expensive over time. The interest is calculated daily or monthly based on your card's APR (Annual Percentage Rate).

• Impact on Credit Score: Carrying a balance can negatively impact your credit%20score if it leads to high credit utilization. Credit utilization is the amount of credit you're using compared to your total available credit. Keeping your credit utilization low (ideally below 30%) is good for your credit score. Consistently maxing out your credit card or carrying a large balance close to your credit limit can hurt your score. However, simply carrying a small balance and making on-time payments usually won't severely damage your credit and may even help, by showing active use of the card.

• Loss of Grace Period: Many credit cards offer a grace%20period, which is a period of time (usually around 21-25 days) between the end of your billing cycle and the payment due date. If you pay your balance in full each month, you avoid paying any interest charges. However, if you carry a balance, you typically lose the grace period on new purchases. This means interest starts accruing on new purchases immediately, from the date of the transaction.

• Debt Accumulation: Carrying a balance can lead to a cycle of debt. As interest charges accrue, your balance grows, making it harder to pay off. This can result in long-term debt and financial strain.

In summary, carrying a balance on a credit card can be costly due to interest charges, potentially harm your credit score (depending on utilization), and lead to a cycle of debt. Paying your balance in full each month is the best way to avoid these negative consequences.