There are certain myths about credit cards that you need to know about right now. Those who don’t have all the facts can quickly get themselves into a lot of trouble financially. Whether you already have a credit card or want to get one, this information is very useful. We will take a look at some of the most common misconceptions about this form of borrowing. The more you know about credit cards, the easier it will be to use them to your advantage.
Credit Cards Keep People in Debt
Those who misuse or abuse credit cards often end up in debt for years, but they can very beneficial when used responsibly. The fact is that you don’t have to end up in crippling debt for a long time. You just have to make sure that you don’t use your credit cards unless you really need to, and always pay your bills on time. The main reason why people end up in credit card debt is because they spend money recklessly with them. You should always think about whether or not it is a good idea to use your credit card each time. This will help you avoid being saddled with significant debt for many years.
Maintaining a Balance on Your Account Improves Your Credit
Some people wrongly believe that maintaining a balance on your credit card will steadily improve their overall score. The truth is that paying the minimum on your card will actually inhibit you from raising your credit rating. You should always try to pay off your balance before you even get your bill. Carrying a balance on your account can most certainly work against you, especially if you fail to clear it on time.
If you can’t afford to pay off your balance in full by the due date, take care of as much of it as possible. It’s never a good idea to not pay at least the minimum amount on your card. This is precisely how a lot of people fall behind and end up in debt for a long time.
You Should Never Have More Than One Card
Another common myth about credit cards is that it’s never a good idea to have more than one. If you feel like you can be responsible with multiple credit cards, it can be good to have them. Just make sure that you find the right ones. There are lots of different credit card options to choose from. The cash back rewards alone are enough of a reason to consider doing this. You don’t want to get a new credit card just to have one, but there are benefits to think about.
Getting a Credit Card Hurts Your Credit
It’s true that getting a credit card does lower your score by a few points, but it’s nothing serious. If you already have at least decent credit, this is nothing that you should worry about. Even those with bad credit will need to keep in mind that having a credit card can help one’s credit. You just need to make sure that you pay the balance on your account in a timely manner.
Avoid Credit Limit Increases
Too many people are scared of accepting credit limit increases because of what they think it will do to their credit. You will obviously still need to be responsible with how you use your cards, but this increase can work to your advantage. You’ll be able to spend more money with your card, which can be advantageous when you have an emergency expense. It’s always better to have the option than not.
You Need Credit Cards from Each Company
If you really think that you absolutely need a credit card from each of the major companies, think again. These days most businesses accept any major credit card. You might occasionally run into a place that only accepts certain credit cards, but it’s pretty rare. You can certainly get one of each, but just know that it is not a necessity.
It’s Okay to be Late on Your Credit Card Bills
It’s never okay to be late on your credit card bills for a number of reasons. You will incur some steep late fees, and your credit will suffer as a result. Anyone who uses a credit card should take this seriously. Adopting a carefree attitude about paying these bills will inevitably land you in trouble.
Credit cards can be incredibly helpful or harmful, depending on how you use them. These misconceptions can do a lot of damage to your credit and finances, which is why it’s so crucial to know the truth. If you want to maintain your financial freedom long term, you will have to keep all of these things in mind.