How does carrying a credit card balance hurt you?

Carrying a credit card balance means you pay interest, typically at very high rates averaging around 20-24% APR. This makes your original purchases significantly more expensive over time. For example, carrying a $1,000 balance at 20% APR and making only minimum payments could cost you hundreds in interest and take years to pay off. Beyond interest charges, a high balance relative to your credit limit raises your credit utilization ratio, which can lower your credit score. A damaged score then makes it harder and more expensive to borrow money for things like a car or home. The combination of compounding interest and reduced creditworthiness creates a cycle that can be difficult to escape the longer you carry the balance.