Why carrying a balance on credit cards can hurt your score

(InvestigateTV) — Only 40% of Americans recognize carrying a balance on a card can hurt their credit, according to a new NerdWallet report.

As the U.S. continues to deal with inflation, many Americans have reported paying late fees on bills and using credit cards to cover the cost of necessities.

And while a third of Americans say they’re using credit cards to pay for necessities in order to accumulate rewards or cash back, 16% admit they didn’t have the money to pay for these expenses outright. That means they are taking on debt to buy those needed purchases.

Sara Rathner with NerdWallet said credit card debt can be destructive.

“It is hard out there still – prices are still high and interest rates are still hovering on average over 22%,” Rathner said. “So, when you do get into credit card debt it’s really expensive and it can be really hard to get yourself out. That’s where you really need to revisit your budget, revisit your sources of income, see if you can make some changes to better able to afford those day-to-day purchases.”

It’s easier said than done, but Rathner said it’s better to avoid credit card debt as much as possible because it’s so expensive right now.

And she said missing a payment is one of the worst things you can do.

“Late fees kick in on credit cards if you miss your payment due date, and if you’re more than 30 days late that could affect your credit score pretty significantly around 100 points,” Rathner shared. “So, it’s absolutely something you want to try avoiding. What you can do is, if you make at least the minimum payment by the due date and if possible, pay more if you can. And even better pay the bill in full and then you avoid the debt entirely.”

Rathner said earning rewards points on credit cards is good, but it only works if bills are paid in full and on time each month.

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