Which action helps maintain financial health by reducing debt?

• A. Carry high balances to maximize rewards.
• B. Keeping your accounts open and unused.
• C. Pay off debt and keep balances low on credit cards and other revolving credit.
• D. Applying for new credit accounts every month.

Answer: (C)

Managing debt directly strengthens your financial health. Paying off what you owe reduces the principal and minimizes interest charges over time, so your total debt decreases rather than grows. Keeping balances low on credit cards and other revolving credit also helps by lowering your credit-utilization ratio—the portion of your available credit you’re using—which supports a better credit score and makes borrowing cheaper in the future. Together, these actions actively reduce debt and prevent it from snowballing.

Carrying high balances to chase rewards increases the amount you owe and the interest you pay, which harms financial health. Keeping accounts open and unused doesn’t lower debt and may waste opportunities to reduce it. Opening new credit repeatedly adds more debt and can hurt your credit score.