Credit cards are a complex thing, which means there’s a lot of misinformation out there. Sometimes, myths and fake facts don’t matter too much. But, with regards to credit cards, they matter a great deal. Loads of people have misconceptions about credit cards that either lead to misuse or put them off a great financial tool.
Some of the biggest credit card myths are going to be busted today, as we take a look at some of the lies drifting around online.
Credit Cards Cause Debt
It’s amazing how many people hear this myth and take it to be true. Largely, people believe it because there are loads of examples of people in credit card debt. The fact that there’s even a term known as ‘credit card debt’ almost makes this myth believable. The truth is that credit cards don’t cause debt, misuse of credit cards cause debt. Use your card incorrectly by maxing it out every month and not paying the balance in full, and you will end up in debt. Use it responsibly, and there will be no problems at all.
Credit Cards Have High-Interest Rates
This myth is often the reason some people stay far away from credit cards. Loads of people will scream and shout about how all credit cards have high interest rates. This simply isn’t true, credit cards have different interest rates depending on the provider and your credit score. In fact, as it mentions on consolidate.loan, you can even get some credit cards with 0% interest rates to help transfer existing credit card debt. This idea that all cards have high-interest rates couldn’t be further from the truth. If you’ve tried applying for credit cards and have been given high rates, it’s probably because you have a bad credit score.
Credit Cards Provide You With Extra Money
Some people see credit cards as a way of gaining extra money. It’s easy to think like this when you see your credit card balance and your bank balance side by side. It looks like you have more money, but you don’t. The reality is, you will have to pay for every penny you spend on your credit card. Just because your bank balance doesn’t go down after a credit card transaction, it doesn’t mean things will stay that way. You have to pay for what you use every month, you haven’t got any extra money at all.
Credit Cards Automatically Improve Your Credit Score
If you read some advice on how to improve your credit score, you often find people telling you to get a credit card. This causes many individuals to believe that having a credit card automatically gives your score a boost. Again, this is false, and it all depends on how you use your card. Make payments on time and use it responsibly, and you will see a score boost. Spend all your balance every month and don’t pay it off in full, on time, and your score won’t improve.
Have you fallen for any of these credit card myths? If so, now you know they’re false and understand the truth behind them all. Hopefully, it will help you approach credit cards with more knowledge and confidence.
Source of images: Pixabay.com