{"id":934,"date":"2021-10-26T15:48:04","date_gmt":"2021-10-26T11:48:04","guid":{"rendered":"https:\/\/moneymall.ae\/credit-blog\/?p=934"},"modified":"2021-10-26T15:59:55","modified_gmt":"2021-10-26T11:59:55","slug":"carrying-a-high-balance-credit-card-a-big-no-no","status":"publish","type":"post","link":"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/","title":{"rendered":"Carrying A High Balance Credit Card? It&#8217;s A Big No-No"},"content":{"rendered":"<p>It doesn&#8217;t take long to run up a high balance credit card. Sometimes all it takes is one large purchase\u2014new furniture, a vacation, or holiday purchases\u2014to put you at or <strong>close to your credit limit<\/strong>. Even though your credit card issuer gives you a lot of flexibility to repay your balance over time, having a <strong>high credit card balance<\/strong>\u00a0is bad for you for several reasons. Here are a few of them\u2026<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a23373b879d8\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a23373b879d8\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#What_makes_a_high_balance_credit_card_a_big_no-no\" >What makes a high balance credit card, a big no-no?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Impact_on_your_credit_score\" >Impact on your credit score<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Qualifying_for_new_credit_cards_and_loans\" >Qualifying for new credit cards and loans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Effect_on_minimum_payments\" >Effect on minimum payments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Cost_of_high_balances\" >Cost of high balances<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Risk_of_debt\" >Risk of debt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Lower_available_credit\" >Lower available credit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/moneymall.ae\/credit-blog\/carrying-a-high-balance-credit-card-a-big-no-no\/#Points_to_remember\" >Points to remember<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p style=\"text-align: center;\"><em><strong>Read More:-\u00a0<a href=\"https:\/\/moneymall.ae\/credit-blog\/912-2\/\">Is Paying The Annual Fee For A Credit Card Worth It?<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_makes_a_high_balance_credit_card_a_big_no-no\"><\/span><strong>What makes a high balance credit card, a big no-no?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A credit card can at once be both a blessing and a curse. While it offers the <strong>convenience of cashless transactions<\/strong>, a <strong>cardholder<\/strong> must also bear the responsibility of using the piece of plastic in a careful and thrifty manner. With a credit card in hand, many consumers are tempted to spend more than they can pay off. Meanwhile, there are others who frequently max out their cards without realizing the negative effects of such actions. The general rule to be followed with credit cards is that your balance should not surpass <strong>30% of your credit limit<\/strong>. Ideally, you should ensure that it remains <strong>below 10% at all times<\/strong>. Here\u2019s what can happen if you get into the habit of carrying a high balance on your credit card:<\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Impact_on_your_credit_score\"><\/span><strong>Impact on your credit score<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A maxed-out credit card (when your balance is right at the credit limit) is harmful to your credit score, which is the <strong>three-digit number<\/strong> that gauges your creditworthiness. Experts say that a high credit card balance could cause your credit score to drop more than 100 points, depending on the other information in your credit report. When the ratio of your credit card balance to the credit limit, i.e. your credit utilization, gets too high,<strong> your credit score suffers<\/strong>. It goes without saying, the higher your balance, the more your <strong>credit score suffers<\/strong> which means keeping a low balance is better for your credit score.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Qualifying_for_new_credit_cards_and_loans\"><\/span><strong>Qualifying for new credit cards and loans<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Among a few other factors, credit cards and lenders consider the amount of credit card debt you have when you apply for a new account. Carrying high balances on <strong>several credit cards<\/strong> could hint that you have more debt than you can handle, which causes creditors to question whether you can handle another debt obligation. Thus, the institution may turn down your application for a new loan altogether. Maintaining low balances makes you a more attractive borrower, which is particularly important if you&#8217;re preparing to apply for a mortgage or auto loan.<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><em><strong>Read More:-\u00a0<a href=\"https:\/\/moneymall.ae\/credit-blog\/5-balance-transfer-credit-cards\/\">6 Best Balance Transfer Credit Cards in UAE for July 2020<\/a><\/strong><\/em><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Effect_on_minimum_payments\"><\/span><strong>Effect on minimum payments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Have you ever paid attention to how your credit card minimum payment moves in relation to your credit card balance? Minimum payments are typically calculated as a percentage of your credit card balance, <strong>2% or 3% of the balance<\/strong>, for example. As your credit card balance grows, so does your minimum payment.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Cost_of_high_balances\"><\/span><strong>Cost of high balances<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Each month you do not pay your balance in full, you&#8217;ll be charged interest in the form of a finance charge. These monthly finance charges are calculated based on <strong>your credit card balance<\/strong> and your interest rate. The higher your balance, the higher your finance charges will be. Carrying a high credit card balance can cost hundreds of dirhams in a year, especially if you are only making minimum payments.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Risk_of_debt\"><\/span><strong>Risk of debt<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Consistently carrying a high balance could lead to a situation where you have borrowed more than you can pay off. Debt happens when you repeatedly borrow more money than you are willing to pay pack. Having a high credit card balance, especially on more than one credit card, doesn\u2019t help your debt situation. Keep your balances low, or paid off even, to avoid being in debt.<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><em><strong>Read More:-\u00a0<a href=\"https:\/\/moneymall.ae\/credit-blog\/how-many-credit-cards-can-a-person-hold-in-uae\/\">How Many Credit Cards Can a Person Hold In UAE?<\/a><\/strong><\/em><\/p>\n<ul>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Lower_available_credit\"><\/span><strong>Lower available credit<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>One of the boons of a credit card is that you can use it to borrow money for various purposes, like funding your business or for <strong>emergencies such as hospitalization<\/strong>. But if you are already carrying a high balance, you may not be able to use your card for that particular need. With all transactions, the credit card issuer will place an authorization hold on a portion of your funds. If a high balance leaves you without enough available credit, you will have to reduce your balance, use another card, or, worse, cancel your expense altogether. So, using a credit card with a low balance helps you avoid having this issue.<\/li>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Points_to_remember\"><\/span><strong>Points to remember<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As a general rule of thumb, always make sure that you keep the following points in mind when it comes to your credit card balance:<br \/>\nCarrying a high credit card balance carries a number of risks from damage to your credit score to less access to your credit limit.<br \/>\nIncreasing your <strong>monthly credit card payment<\/strong> will lower your credit card balance faster.<br \/>\nFor multiple credit cards with high balances, focusing on reducing one balance at a time is more effective than trying to pay them down all at once.<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><em><strong>Read More:-\u00a0<a href=\"https:\/\/moneymall.ae\/credit-blog\/manage-credit-card-debt-during-covid-19\/\">10 Tips to Manage Your Credit Card Debt During COVID-19 Pandemic.<\/a><\/strong><\/em><\/p>\n<p>It&#8217;s not that you can&#8217;t make large purchases on your credit card. Using your <strong>credit card for large purchases<\/strong> allows you to accumulate rewards, meet the requirements for a sign-up bonus, or take advantage of a promotional interest rate. Of course, there may be situations where even though your <strong>credit utilization ratio<\/strong> is low, your authorized limit is just not high enough to allow you to use your credit card for your desired purpose. In such cases, you can request that your card company increase your limit.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It doesn&#8217;t take long to run up a high balance credit card. Sometimes all it takes is one large purchase\u2014new [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":935,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[2],"tags":[273,274,603,604],"class_list":["post-934","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-credit-cards","tag-high-balance-credit-card","tag-high-credit-card-balance","tag-outstanding-balance-credit-card","tag-zero-balance-credit-card-offers"],"_links":{"self":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/comments?post=934"}],"version-history":[{"count":6,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/934\/revisions"}],"predecessor-version":[{"id":2269,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/934\/revisions\/2269"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/media\/935"}],"wp:attachment":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/media?parent=934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/categories?post=934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/tags?post=934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}