It’s been years since Credit Card became a part of our financial system, and over the years, we’ve seen significant development in the credit sector. New financial companies are coming up in the market every year, offering attractive cashback offers so the customers can save some money every time they shop.
However, what usually follow developments are myths and rumours, and hence multiple Credit Card issues are stopping customers from opting for one. Below are some of the most popular credit card myths, and we are here to bust them.
Myth 1: You should never get a Credit Card.
The first most common myth that we’ve seen about Credit Cards is that it’s better to avoid getting one since it will lead you to debt. However, this isn’t the case if you are a responsible Credit Card user. Anyone getting a Credit Card should know his limits because maxing out on your Credit Card and spending more than what you earn is never a good idea.
If you are a responsible Credit Card user, having a Credit Card can be one of the best things for you because every company that offers a Credit Card also gives you attractive offers that help you save up money while you shop. In addition to this, it is also a great tool to build up your credit history.
Myth 2: Carrying a balance every month
Many people think that paying the minimum charges and carrying your balance forward every month will help you improve your Credit Score. However, this isn’t the case because moving your balance forward month-to-month comes with serious interest charges and negatively impacts your Credit Score.
Suppose you want to use your Credit Card in the right way. You must keep making timely payments and use only 30% of your credit card limit. Experts believe that doing this can help you to make your credit score better. It is recommended that you avoid this Credit Card myth and follow our tips to boost your Credit Score in the right way.
Myth 3: Applying for a New Credit Card drastically hurts your Credit Score
If you have a Credit Score of more than 700, you shouldn’t be worried about getting a new credit card. You can get your credit report online to look at your credit score before applying for a Credit Card. Many people believe that a new credit card brings a massive fall to their credit score, but it only goes down by a few points.
On the other hand, if you are someone with a bad cibil score, going for a personal loan would be a better option.
Myth 4: You should cancel the Credit Cards which you don’t use regularly
Whenever you cancel a credit card that you do not use regularly, it negatively impacts your credit score since it hits your credit utilization ratio. You also lose the credit limit that’s available in your name, and hence it is recommended to keep your unused credit cards in a safe place instead of cancelling them permanently.
Myth 5: Having a Credit Card is like having free money
If this was true, then every other guy on this planet could have turned into a millionaire. However, this isn’t the case. Having a credit card doesn’t mean that you have free money, so you should manage your spending habits according to your monthly income. Use a credit card only when required and never max out on Credit Limit. Always use the money you can pay back quickly to avoid debt and high-interest charges.
Myth 6: Ignoring your Credit Card Statements won’t cause you any problems
Many people think that not paying attention to their credit card statement won’t harm them, but this isn’t the case. If you have a Credit Card, you should check your statements every week to know where you spend your money. In addition to this, developing this habit can also save you from fraud since you’ll be able to report any unauthorized transactions early.
Myth 7: The Law Probhits the Merchant to Add a Credit Card Surcharge
The government or the law never interfere with Retailers when it comes to Credit Card surcharges. Usually, retailers bare the surcharge that comes when you make a payment with your Credit Card. However, there’s nothing you can do about those who don’t.
Conclusion
Having a Credit Card brings in many benefits; however, many people are still holding back to get one due to misinformation and rumours. Hence it is essential to get your facts right so the next time you apply for a credit card, the fear of these myths doesn’t stop you.
Author Bio: A finance enthusiast, Mihika Ghosh, works as a Digital Content Creator at Fit.Credit, an all-in-one app that helps you check your credit score for free, stores your financial documents, and gives you timely payment reminders. She creates content that educates people on how they can improve their credit scores along with other investment and finance-related topics. When she is not working, she loves to travel and read to keep up with all things finance and economics.
