Should You Keep a Small Balance on Your Credit Card?

Anita Groves • February 18, 2020

Recently the good people over at Nest Wealth published an article called “The Worst Money Advice We’ve Ever Heard”. On the list was “Always keep a small balance on your credit card”. What they have to say on the subject is spot on:

Someone, somewhere, starting telling people that keeping a small balance on your credit card is a good idea… and unfortunately it stuck. 

Man is that terrible advice. Why would you want to purposely pay interest on something when you don’t have to? People claim it helps your credit score, and although credit utilization is a factor in determining your score (the balance on your card versus your credit limit), the idea that carrying a balance month to month helps you out is a myth. 

Paying your bills on time every time is one of the best things you can do to keep your credit score up. 

So although the idea of carrying a small balance to build your credit is nonsense, it is however a good idea to use your credit card at least once every 3 months (even if you don’t have to). This will ensure the trade line is being reported to the credit agency and the card remains active.

 

If you have any other questions about your credit, or you would like to discuss your personal financial situation, please don’t hesitate to contact me anytime!

 

Share

Anita Groves

PROFESSIONAL MORTGAGE BROKER
CONTACT US APPLY NOW

Download My Mortgage App HERE

Recent Posts

Bank of Canada Holds Rate at 2.25% — September 2, 2026

By Anita Groves • September 2, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. While Canada's economic recovery is broadening, a new layer of uncertainty has entered the picture. Here is what happened and what it means for your mortgage.

Deposit vs. Down Payment: Key Differences for Homebuyers

By Anita Groves • August 26, 2026
When you’re buying a home, two terms often cause confusion: deposit and down payment . While they’re related, they serve very different purposes in the homebuying process. Here’s what you need to know. What Is a Deposit? A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing. How it works : Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded. Connection to your down payment : Once the sale is finalized, your deposit becomes part of your total down payment. Why it matters : The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit. What Is a Down Payment? Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage. Minimum requirement : In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance. Sources : Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds. Example: How They Work Together Imagine you’re buying a $400,000 home with a 10% down payment ($40,000). When you make your offer, you provide a $10,000 deposit . Once conditions are met, that deposit is transferred to your lawyer’s trust account. At closing, you add the remaining $30,000 to complete your full down payment. The lender provides the rest—$360,000—through your mortgage. The Bottom Line Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home. 📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.