What is a balance?

If you've ever had a credit card or a bank account, you've probably heard the term "balance," but these two things have very different meanings.

On a credit card, your balance is the amount of money you owe. On a bank account, it's the amount you actually have. On the latter, the larger the amount, the more money you have. For the former, the bigger the number, the more time it's going to take you to pay it off, and the more quickly your interest charges will add up.

What's more, a credit card balance can also negatively impact your credit score, while your bank account balance will have no effect at all. In general, it's a good idea to keep your balances to less than 30 percent of the total maximum across all your credit card accounts, so that your standing will be as strong as possible, and the added debt won't grow too quickly for you.