• May 25, 2022
  • Posted by General Electric Credit Union
  • 2 read

Why You Should Avoid Carrying a Credit Card Balance

When you go to make a credit card payment, you’re presented with two options: paying the balance off in full or making the minimum payment due. While the latter can be tempting, doing so can negatively impact your financial well-being. Learn why in the guide below – as well as how you can budget for payments. 

Looking at the big picture 

While making at least the minimum payment due is better than not making one at all and will keep you in good standing with your creditor, paying off your balance in full is more advantageous in the long run. This is because of the annual percentage rate (APR) associated with your card. If you carry over a balance, you’re borrowing the money from a lender. The APR is the interest they charge you for borrowing the funds. It won’t come into play if you pay off a card’s balance in full and on-time. 

If you’re a cardholder with a significant amount of debt, it may be worth looking into a balance transfer. This allows you to take your balance and transfer it to a new card with a lower APR. While you may have to carry over a balance as you whittle away at debt, the lower APR reduces the impact of compounding interest. Continuously carrying over a $1,000 balance on a card with an APR of 25% can be much more detrimental than doing the same on a card with an APR of 10%. 

Tip: Becoming a member of General Electric Credit Union (GECU) means free access to a wealth of debt payoff resources, including debt calculators, our Money Management app, and much more! Live or work in the Tri-State area? You can bank with us

Budgeting for card payments

The best way to ensure you can make full, on-time credit card payments is to create a budget. Review your monthly income and spending habits to identify where you should cut back. You may be able to redirect funds that previously went to an unused streaming service to credit card payments. Or, you may identify spending habits that are causing you to live outside your means and commit to scaling back. 

GECU makes it easy to take the pulse of your financial well-being thanks to Money Management. Available to members enrolled in Online Banking or our mobile app, this tool connects all your accounts, loans, and investments, so you have a holistic view of your money. Have an account outside of the Credit Union? No problem – you can connect those, too, for a complete financial picture. Start budgeting, goal setting, and tracking your spending today with the tools and resources available through Cincinnati’s Best Credit Union. Together, we’ll stay on top of credit card payments. 

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