Benefits of Keeping a Credit Card Balance

In most of the articles I have on this blog, I talk about reasons to get rid of credit card debt and improve your credit score as much as possible. For the most part, it is a better idea to keep your credit card balance low because it will keep your score high and your revolving debt low. Nevertheless, there are a few benefits that come along with high credit card balances, and you may want to keep those in mind. Before you pay off your credit card completely, think about the information below. It will help you determine what you should do with your money.

High Balances Lead to Higher Spending Limits

I have had several credit cards with Capital One over the years, and some of them had higher spending limits than others. I called to ask about increasing the limit on one of my cards so I could make a big purchase, and the company informed me that I had not maxed out my card enough times to see an increase. Unless you use your card the way the credit card companies want you to use it, you may never get a chance to increase your spending limits. Thus you may want to keep a high balance for at least three months to see if it improves the amount of money you have available to you.

High Balances Make You Spend Less

When you have the full balance of a credit card left over, you may be tempted to rely on it as if it is extra money for you. That used to always be my mentality until I used my credit cards to pay for an expensive piece of furniture. Once I had the cards maxed out, I no longer relied on them for help. Thus I was basically forced to work for my money, which was a lesson I needed to learn. If you need a quick swift in the rear, try paying on a card that you can’t use. It’ll make you regret ever spending the money on it in the first place.

High Balances Show Consistent Payment History

If you are able to pay for your credit card for several months in a row, you will be able to establish a credit history for banks and other cards to look at. They can see that you have had a good history with a credit card company, and then they may extend a line of credit to you. This is not always the case, but you can use a high balance to build your credit score. You just need to make sure to pay it off month by month.

Do the Pros Outweigh the Cons?

While there are a lot of perks that come with having a high credit card balance, there are also a lot of cons to keep in mind. High credit card balances mean high revolving debt, which may look negative in the eyes of a future lender. A high balance is also an excuse to throw away your money because you won’t be paying much beyond interest with it. For the most part, there just aren’t enough positives to outweigh the negatives that come along with high balances.

                            

If you are going to keep your balance high for a little while, make sure you keep up with your payments. That way people can at least see that you are making an effort to cover your debt. With the right amount of payments, you could improve your score and still keep a high balance at the same time.