There lies much power in the practical use of credit cards; deception has it in that mismanagement often leads to unnecessary debt. One of the cardinal tenets of financial literacy and proactive cash management is busting the myths surrounding these instruments. The following are five myths all cardholders should know. 5 Credit Card Myths You Should Know

5 Credit Card Myths You Should Know

1. Carrying a Balance Improves Your Credit Score.
The most popular myth says that the carrying of a balance will; in fact, help boost one’s credit standing. In fact, debt carrying can theoretically accrue a maximum charge of interest while working against you in terms of score. The sanctity of a credit rating can be preserved only while paying the complete due amount by a cardholder every month.

2. It Is Okay to Pay the Minimum Only
Minimum payments might keep an account from going into collections; but they also extend debt repayment and increase interest charges against the debtor. Therefore, one should always try to pay more than the minimum amount to settle debts quicker and avoid paying unnecessary interest.

3. Opening Several Credit Cards Hurts One’s Credit
Owning a whole slew of cards is somehow presumed to bring disfavor in regards to one’s credit reputation. In fact, responsible management of several cards will in the end serve well in improving your credit utilization ratio and credit history, both of which positively influence your score. Control of spending is the important factor here.

4. Credit Cards are Only for Emergencies
Totally, while credit cards can definitely save the day with purchases made in emergencies, they can also be used in everyday life and for rewards. When used wisely, cards can help you get paid back, get points, or get a vacation prize.

Also Read: Finance Minister Nirmala Sitharaman on GST 2.0: For Common Man

5. Apply for a Card: Imminent Drop in Credit Score
Applying for a new line of credit may initiate a hard credit inquiry-little influence to decrease its score-at least in a short run. Stunningly, timely payments and the responsible utilization of credit soon outweigh this blip, which never will have lingering effects on the score.

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