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Carrying a $2,000 balance on a card charging 22% APR costs roughly $440 a year in interest.
For some people, that’s an unavoidable reality right now. For others, it’s happening because of a surprisingly common piece of bad advice — that you need to carry a small balance to build up your credit score.
That second group is who this is for. If you’ve been carrying a balance month to month on purpose, thinking it helps your score, it doesn’t.
It actually just costs you money, and may be hurting your score at the same time.
Where this myth comes from
The logic sounds almost reasonable. Credit cards are revolving credit accounts, and some people assume that actually rolling a balance over from month to month signals healthy usage to the credit bureaus.
It actually doesn’t. Lenders may love that you’re paying interest. But the credit bureaus only care that you’re using the card responsibly and making on-time payments.
What actually moves your credit score
Two factors dominate your FICO® Score: payment history (35%) and credit utilization (30%). Together, they make up nearly two-thirds of the total.
- Payment history is simple: pay on time, every time. Carrying a balance has nothing to do with it.
- Credit utilization is where the myth actually is harmful. Utilization measures how much of your available credit limit you’re using at any given time. Keeping that number low (generally under 30%, and ideally under 10%) is one of the clearest paths to a stronger score.
Carrying a balance raises your utilization — which works against you, not for you.
If high interest is keeping you stuck on a balance you can’t get rid of, a balance transfer card might help — some offer 0% intro APR for up to 21 months. Check out our top picks for 2026 here.
The cost of carrying a balance
Credit card debt is one of the most expensive types of lending. The average APR on a credit card is 21% right now.
A $1,500 balance at 21% APR runs about $300 in interest per year. But if you pay it off in full each month, that number goes to $0.
The only thing you need to do to build credit with a credit card is use it and pay the bill. Groceries, gas, a streaming subscription — small recurring purchases work just fine.
The balance at statement close is what gets reported to the bureaus, and a low one is better than a high one every time.
The bottom line
If you’re currently carrying a balance, the most credit-friendly move is a plan to pay it down. Once it’s clear, keep it clear.
And if high interest is making that harder than it needs to be, a balance transfer card with a long 0% intro APR period can pause interest entirely — so every payment goes straight toward the balance instead of the lender’s pocket. Compare our top 0% intro APR cards of 2026.
Using credit is smart. Paying interest on it doesn’t have to be part of the deal.
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