One super harmful myth about finances and credit that’s floating around surrounds credit cards.

The myth: If you keep a balance on your credit card, you’ll improve your credit rating.

First, understand that the balance on your credit card makes up just one part of your credit score. This part is just as important as your payment history, the types of accounts you have, and how many times creditors have checked your score.

It’s recommended that you carry a maximum balance of 30% of your credit limit. So, if your credit card has a limit of $10,000, you should carry a maximum balance of $3000 at any given time. Any more than this will hurt your credit score.

The downside to carrying a balance? Interest fees! This is money flying straight out of your pockets and into your credit card company’s. Not only that, but you also risk late fees and a hit to the ‘payment history’ section of your score if you are ever late with your payments.

The best strategy? Find a card with a killer bonus program and pay it off every. single. month. No exceptions.

You want to have a good credit score for quite a few reasons – insurance discounts, job opportunities, better housing options (mortgage and rental management companies check for this), and much, MUCH better terms on loan products.

Credit cards are just one piece of the financial puzzle, but they can be important. We’re a full-service, holistic financial planning firm. We will put together a complete roadmap for you that will lead you all the way up to retirement and beyond. Give us a call at 513-563-PLAN (7526) or go online today to book a 15-minute chat to see if we’re the right fit for you and your long-term goals.

Nikki Earley, CFP®