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According to a recent survey LendingTree revealed today, 65% of respondents think carrying a balance on a credit card will improve their credit scores. Furthermore, 35% of respondents aren't aware of their credit card's interest rate.

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Combined, these two factors can have a detrimental effect on both credit scores and bank account balances.

"The myth hurts cardholders because it costs them money. If they're only carrying a small balance, it may not cost them a huge amount of money, but over time, it adds up," said Matt Schulz, chief credit analyst at LendingTree, in a press release. "It's especially concerning for the youngest generation who could end up carrying a balance for several decades."

The financial services marketing company found that 79% of Gen-Z respondents think carrying a credit card balance is a good thing. The best practice, however, is to pay off the card's statement balance in full each month and to not spend money you don't have.

If you're carrying a balance from month to month on a credit card with a high annual percentage rate (APR), you will suffer from interest charges. Additionally, depending on your overall credit utilization, your credit scores could be harmed. And if you're not making monthly payments on time, your credit scores will definitely take a hit.

Credit utilization is how much of your overall credit you're using. Credit scoring models like FICO take that into account when generating credit scores. A lower credit utilization leads to healthier scores.

If you have one credit card with a credit line of$5,000 and a balance of$2,500, for example, that would mean your credit utilization is 50%. According to Experian -- one of the three major credit bureaus that generates credit scores -- a good credit utilization is 1%. However, consumers would likely be ok as long as they did't go above 20%.

But carrying a balance could lead to debt that takes a number of years to pay off, leaving the cardholder with a much higher bill compared to the amount of money they borrowed.

If you do have a credit card with a high balance that's accruing interest, it's not too late to turn things around. Consider a credit card that offers an introductory 0% APR for balance transfers. You can transfer the balance that's accruing interest to the new card and pay it down for a set time at zero interest.

Also:The best balance transfer cards

Provided you don't have too many credit cards already, it could help your credit utilization by increasing the overall credit available to you.

For consumers who are just starting to delve into the world of credit cards, large financial institutions have recently been putting greater emphasis on supporting clients' financial health. Bank of America, for example, offers the Better Money Habits hub that covers credit card basics.

Credit cards can be a great tool to build strong credit scores, but it takes some know-how to use them responsibly. Setup payment alerts to avoid missing payments, pay off the credit card statement balance each month to avoid interest charges, and try not to spend money you can't pay back immediately.

Also: 10 things to know before getting your first credit card

The LendingTree survey was conducted from 1,323 US consumers from February 15 to 21, 2022. The survey was administered using a non probability-based sample, and quotas were used to ensure the sample base represented the overall population.

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