Credit Card

Is it better to pay your credit card in full or carry a balance?

If you have a balance on your credit card, you might have the option to pay it off in full or carry it from month to month. Most of the time, paying off your credit card in full is the best approach. CNBC Select explains why and how carrying a balance can harm your financial health.

Should you pay your credit card in full?

Why carrying a balance isn’t a good idea

How carrying a balance becomes expensive

Let’s say you’ve bought a $1,400 laptop and charged it to your credit card. You could pay off the $1,400 balance in full but that would mean giving up breathing space in your budget for the month. You decide to carry the balance instead and pay $100 per month. At a 23% APR, it takes you 17 months to get rid of the debt and you end up paying $245 in interest. That’s 15% of your laptop’s price.

Naturally, the more debt you have and the less you pay monthly, the more you’ll lose to interest. Not to mention, the balance will take you longer to repay. That’s how people often fall into the credit card debt trap. In the example above, a single laptop purchase might not do much harm, but it’s too easy to keep using your credit card, adding to the balance. Once such a spending pattern solidifies, you risk finding yourself in toxic debt.

Wells Fargo Active Cash® Card

On Wells Fargo’s secure site

  • Rewards

    Unlimited 2% cash rewards on purchases

  • Welcome bonus

    Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months

  • Annual fee

  • Intro APR

    0% intro APR for 15 months from account opening on purchases and qualifying balance transfers; balance transfers made within 120 days qualify for the intro rate

  • Regular APR

    20.24%, 25.24%, or 29.99% variable APR on purchases and balance transfers

  • Balance transfer fee

    Introductory fee of 3% for 120 days from account opening, then up to 5% ($5 minimum)

  • Foreign transaction fee

  • Credit needed

How your credit card balance affects your credit

Experian Dark Web Scan + Credit Monitoring

On Experian’s secure site

  • Cost

  • Credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • Identity insurance

How to practice good credit card habits

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.