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Busting Common Myths about Credit Cards

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July 23, 2024

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Busting Common Myths about Credit Cards

Credit cards can be confusing, and many people believe the wrong things about them. Let’s take a look at some common credit card myths and find out what’s really true.

Myth 1– Maintaining Balances Boosts Credit Scores

Truth– Many people believe that not paying off the entire balance on their credit card each month will help their credit score. This is not true. The amount of your available credit is what you actually use that matters. If you save a small amount and pay off your card in full each month, your credit score will go up.

Myth 2– It’s Better for Your Credit Score to Close Old Credit Cards

Truth– Applying for too many credit cards in a short amount of time and asking too many complex questions can cause your credit score to plummet a bit. However, this effect is usually small and goes away over time if you manage your documents properly. Get your applications out and make sure you can handle the credits you get.

Myth 3– It’s Best to Have Just One Credit Card.

Truth– If you use your credit card properly, having multiple credit cards can be beneficial. Having multiple cards can help you earn different rewards and increase your income. It’s important to use cards wisely, pay bills on time, and keep balances low.

Myth 4– Credit Cards Usually Result in Debt

Truth– Credit cards are not the only source of debt and lead to overspending and mismanagement. Credit cards can offer excellent benefits such as rewards and fraud protection if used responsibly. Just be careful not to spend more than you can afford each month.

Myth 5– Making the Minimum Payment Is All That Is Required.

Truth– Paying too little on your credit card statement can lead to higher interest rates and accumulation of debt over time. It is best to pay in full each month to eliminate these fees and stay in control of your debt.

Conclusion:  Knowing how to use credit cards properly can really help. You can maintain your financial health and make wise decisions if you know the truth behind this common misconception. Always let them know and use credit cards to your advantage. Remember, knowing the facts can help you manage your money better.