Early on, you may have been taught that carrying a balance on your credit cards will improve your credit score. Unfortunately, this myth has been passed on so often that it’s no surprise many are struggling to get out of debt. Carrying a high balance can do just the opposite; it can negatively affect your credit score.

If you’re wondering how damaging your carryover balances can be, here are five critical ways your debt effects your finances.

1. Your debt becomes more expensive

Carrying a balance on your cards lets your creditors charge interest, which raises the cost of your purchases. Suddenly, that $30 shirt you purchased last year may cost you double the amount thanks to accumulated interest. And the national average is much higher than our experiment – according to this website it has gone up $6,200 since 2017.

2. High balances increase your credit utilization ratio

The two most significant factors for your credit score are your payment history and your credit utilization ratio. Credit utilization is a percentage of the balances you carry divided by the total amount of credit you have. A good rule of thumb is to keep your credit utilization under 30% of your total credit. Anything over 30% will lower your credit score, making it harder for you to acquire things like a debt consolidation loan, car loan, or a mortgage for a new home.

3. It becomes harder to get out of debt

The longer you carry a balance on your cards, the more normalized it becomes in your mind that debt is just another part of life. Consequently, your mindset shifts to a perspective that being debt-free isn’t realistic, and it’s more comfortable to stay in debt. The longer you have this mindset, the more difficult it becomes to see the damage debt has done and why you need to get rid of it as quickly as possible.

Don’t let yourself become complacent with keeping high balances on your credit cards. You deserve to have a life that doesn’t include stress caused by the ongoing problem of debt.

4. You’ll be less likely to get approved for new credit

Issuing credit is a risky game for businesses, so looking at the whole picture of an applicant’s finances is a must for them. You may have a solid salary and pay your bills on time, but if you have a high balance on your cards, that could be a reason you may be denied.

Having a high balance that never gets paid off might sound like a creditor’s dream, but they see it differently. Suppose you lose your job or get hit with some hefty medical bills; suddenly, paying off your balances isn’t a priority. You might even have to declare bankruptcy, which means your creditor must write off your balance in full.

Those scenarios might seem like a long shot, but they’re risky enough that many companies don’t want to take the gamble. When it comes time for you to apply for a new credit card or loan, you could be denied solely due to the amount of debt you carry every month.

5. Your interest rates will go up

Using credit responsibly is typically rewarded by lenders looking for customers like you. If you have a consistent pattern of good behavior with debt management, then you can expect to receive offers for loans or credit cards with lower interest rates.

However, if you carry a high balance and aren’t using your credit responsibly, your loan or credit applications may come back with a higher interest rate than you would like to see. If you’re able to reduce your debt load to get it at least under that 30% utilization ratio, you’ll see how much cheaper borrowing money can be.

The bottom line

Carrying over balances on your credit cards every month is an expensive habit that has ripple effects on your future opportunities like mortgage loans and other big purchases. Use these five reasons to understand how much your debt is costing you and make a plan to become debt-free as quickly as possible.