Credit cards are a convenient financial tool, offering flexibility and benefits like reward points, cashback, and more. However, many myths surround their usage, leading people to make poor financial decisions. These misconceptions can harm your credit score and financial health. Here are some of the most common credit card myths and the truth behind them.

1. Minimum Payments Improve Your Credit Score

Many people believe that making only the minimum payment on their credit card balance will improve their credit score. However, this is a myth. Paying only the minimum amount will result in high-interest charges and keep your balance lingering for longer. To improve your credit score, you should aim to pay off your balance in full every month. This not only prevents interest from accruing but also signals financial responsibility to lenders.

2. Closing Old Credit Cards Helps Your Score

Another myth is that closing old or unused credit cards can improve your credit score. In reality, closing old accounts can reduce your available credit limit, which might increase your credit utilization ratio and negatively affect your score. It’s better to keep your old cards open, especially if they have no annual fees.

3. One Credit Card is Enough

While having just one credit card is better than having none, it’s not always the best choice for your financial health. Maintaining two or three credit cards can actually be beneficial. It can increase your total credit limit, allowing you to maintain a lower credit utilization ratio, which positively impacts your credit score. You can also earn more rewards by using different cards for different purposes.

4. Using Credit Cards Leads to Debt

Credit cards are not inherently bad; it’s how you use them that matters. If used wisely, they are powerful financial tools. By paying off your balance on time and within your budget, you can avoid debt and enjoy rewards, cashback, and other perks.

5. Applying for New Credit Cards Hurts Your Score

Some people think that applying for new credit cards will harm their credit score. While it’s true that applying for multiple cards in a short period can temporarily lower your score, applying for one or two cards per year is usually fine. A new credit card can even help raise your score by increasing your available credit.

6. Debit Cards Are Better Than Credit Cards

Some people think that debit cards are safer or better than credit cards. While debit cards are useful when you have cash in your account, credit cards offer more benefits, such as reward points, purchase protection and the ability to build a credit history. As long as you manage your spending, credit cards can be more advantageous.

It’s important to separate facts from myths when it comes to credit cards. By understanding the true benefits of credit cards and managing them wisely, you can improve your credit score and maintain good financial health. Always remember, credit cards are tools, and how you use them can make all the difference.

Also Read:Star Hero to Play Mahesh Babu Father in SSMB29 After Vikram’s Refusal?

Share

• 
• 
• 
• 
• 
•