Are you one of those persons who find credit cards mysterious even though you have been using it for a long time? Do you think that your credit card have some nasty secrets like what you have heard from a friend? Worry no more! Because now you will know the truth behind the top 5 myths about credit card and how these myths are actually hurting your credit score and wallet all this time.
01 Use a debit card instead of credit card.
Some of the people would say to NOT get a credit card, as if it is the worst mistake you could ever do in your life. And then, they would advise you to get debit card instead. But little did they know that they are wrong all this time. Similar to the things you hold dear, credit card must also be used with outmost care. Compared to debit cards who do nothing, credit cards are actually one of the easiest ways to build your credit history. It helps you establish a good looking credit history which comes handy in handy for loan transactions.
02 Balance in the Credit Card Helps Build Credit Scores.
The sooner you’ll know that this is not true the better. Thinking of not paying off the entire bill will not in any way help you score. As a matter of fact it can even create a bigger mess in your credit points for you would look like an irresponsible borrower in view of the lenders. If you are having difficulties paying off a balance, simply pay for a certain amount BEFORE your due date.
03 You Should Only Have One Credit Card.
Just because some movies portray those who have multiple credit cards as people who are covered in debt, doesn’t mean you will become one as well. As said earlier, having a credit card incur responsibility at the same time. You should be able to weigh the need to spend and the need to save money. If you think you are as responsible enough to own multiple credit cards, feel free to. One advantage of this is that you can take advantage of the cash back rewards given.
04 I Would Lose so Many Scores if I open a Credit Card.
Although it is true that opening a new credit card will incur deductions in your credit score, the deductions made were not that big of a cut. It only takes a 5point reduction. If it did made a significant change in your credit score you may simply get a secured card to recover your lost credit scores.
05 Never Accept Any Increase in Your Credit Limit.
You think your lender is just playing tricks on you to increase your credit limit? That may be true but you can also switch tables and use their offering to your advantage. For example, if you have a limit of $3000 and a utilization of 35%, the moment you increase the limit into $4000 the utilization level would then go down into 25%. Keep in mind that a lower utilization would mean an increase in credit points.