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Credit Card Myths You Can Avoid

While there may be many misrepresentations of credit cards, it can actually make plenty of financial sense by using one.  First of all, using a debit card opens yourself up for fraud, especially with the amount of data being compromised these days.  With a credit card you don’t have to worry about your bank account getting wiped out.  Mostly the reason why I use a credit card for all purchases are the rewards.  You can earn miles, points, or even cashback by making the purchases that you would be making anyways, so by not using, you are leaving free money on the table.  While sure, you need to watch the balance with a credit card, but you can avoid any myths that are out there.

You Don’t Need a Credit Card

Of course, you can live your life without a credit card, but if you ever plan on buying a house or car, you’ll need to get a mortgage/loan and if you don’t have an excellent credit score, you could be paying a high interest rates and an outrageous amount of interest every month that will increase your monthly payment of what it would be otherwise.  If you can get and use a credit card, but pay off the balance each month, you can build up your credit score.

Making the Minimum Payment is Good Enough

Yes, making the minimum payment will satisfy the minimum of what you owe to keep your account in good standing, but by only paying the minimum you then start carrying over a balance each month and start to pay interest, which depending on your card’s APR, could be upwards of 16%, so the higher the balance you could be paying a couple hundred in interest each month.  If you want to stay out of debt and avoid interest you’ll have to pay more than the interest, with the hopes of paying the full statement balance.

Opening a Credit Card Account Will Hurt Credit Score

Well technically this myth is true, but…it’s not that bad.  By selecting the right credit card, you could be replacing your old card with a card with a lower APR or perks such as rewards.  In having your credit report pulled by submitting an application will lower your score by a few points, but it will be worth it with the lower APR or rewards that will outweigh the points loss, not to mention continuing with a solid history you can gain your points back in no time by continuing to pay on time and pay off your balance each month.

Carrying a Balance Helps Your Score

Speaking of a balance on your account, there is a myth that carrying a balance will help your credit score.  This is actually false because your credit utilization is a huge part that makes up your credit score, so by carrying a balance it reduces your available credit and will actually lower your credit score.  If you want to maximize your credit score you want to be sure to pay the account on time, and pay the full statement balance each month.  Since every increase in interest rate accounts for a higher payment, striving for the highest possible credit score is important.

Close Account When You Reach $0 Balance

It can be easy to slip into debt that it can take some years to get out of.  When you finally see that $0 balance come, your first reaction may be to close the account so you don’t have to temp yourself on charging up the account.  Closing the account actually does more harm than good.  If you can leave the account open but cut up the card, that will get you your best bet because you can keep any credit you have available.  Closing the account can actually lower your credit score, depending on the balances you have on the other cards and your total credit utilization will be taken up more.

I can Hide from My Credit Score

Why you don’t have to disclose your credit score to your friends and family, if you want to get a mortgage or loan at any time you will have explain your credit history.  These days even potential employers can have access to your credit report, which seems strange that having a troubled credit past can cost you a potential job, but I guess the thinking from the employers are that if you cannot handle your own credit, maybe they shouldn’t trust you to work for them.


  1. Yesssss yes yes. My dad always told me that carrying a balance was good for my credit score. It wasn’t until I actually paid off a credit card that I realized PAYING OFF a credit card is what will significantly improve your score lol.

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