NBC’s Christine Romans addressed common misconceptions about credit card usage and its impact on credit scores in a segment on TODAY. She clarified that maxing out your credit card—even if you pay the balance in full each month—can negatively affect your credit score. This is due to the credit utilization ratio, which is the percentage of your total available credit that you are using. Romans emphasized that this ratio should ideally be kept below 30%. Regularly maxing out your card, resulting in a 100% utilization rate, may signal to lenders that you are overextending yourself financially, which can lower your score [1].
Romans also dispelled the myth that carrying a balance from month to month helps build credit. She stated that paying off your card in full each month is the best way to avoid interest charges and maintain a healthy credit score. Carrying a balance and making only minimum payments can lead to high interest costs and potentially harm your financial health over time [1].
Additionally, Romans discussed the effects of cancelling a credit card. Closing an account can hurt your credit score, particularly if it reduces your overall available credit or shortens your average account age. She advised consumers to consider these factors before deciding to close any credit card accounts [1].
In summary, Romans recommended keeping credit card balances low relative to credit limits, paying on time, and avoiding unnecessary account closures to maintain good credit [1].
CONCLUSION
Christine Romans’ analysis highlights that even responsible payment habits can be undermined by high credit utilization. Consumers should focus on keeping balances low and maintaining open accounts to protect their credit scores.