What is Zero Balance Card?
What is Zero Balance?
Zero balance refers to a situation when you don't owe any money to the credit card company or when your bank account doesn't have any money left in it. In terms of a credit card, having a zero balance means that you've paid off all your purchases and fees, and you don't owe anything more. With a bank account, a zero balance means that all money has been withdrawn and there's no money left. However, achieving a zero balance on your credit card is usually a good thing, while a zero balance in your bank account might indicate financial trouble. [1]
3 things to know about Zero Balance
- Zero Balance Can Improve Credit Score: If you consistently maintain a zero balance on your credit card, as a result of using and paying down the card each month, it can positively impact your credit score. It shows you're able to manage your finances well and can pay off your debt consistently. [1]
- Zero Balance Can Reduce Interest Charges: By paying off your credit card balance each month and bringing it to zero, you can avoid being charged any interest. This will save you money in the long run.
- Zero Balance in a Bank Account Can Lead to Fees: If your bank account has a zero balance, it might lead to overdraft fees if you try to make a purchase or withdraw more money. Moving money into the account to bring it above zero balance is typically the best option to avoid these fees.
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