By: Admin / Textr Online
Credit cards make life easier as they are portable and eliminate the need to carry cash around.
Although there are a couple of pros to using credit cards, they can also cause financial trouble if you are not prudent enough with all the responsibilities that come with them. You must also be careful when spending through credit cards and must track your spending.
You might often come across the dos and don'ts of using a credit card, but there are many misconceptions about credit cards and their usage.
Let’s separate facts from fiction!
Here are 3 myths about credit cards that you need to know
The is the most common myth about credit cards that we hear. Many of us have been told that it’s always better to spend cash as compared to using credit cards.
To have a good credit history, you shouldn’t be avoiding paying through credit cards. When you buy through a credit card, it will show potential lenders that you area good credit risk. Paying your credit card bills on time will ensure a good credit score and you will eventually be able to secure loans and mortgages.
It might be true for some that it hurts more to buy with cash than with credit cards. If you are a person who has the tendency to go overboard when spending, then you may do better off going shopping with a set amount of cash in hand. You can also shop using a debit card, as debit cards takes out money directly from your bank account, ensuring that you spend as much money as you currently have.
People have been conditioned to believe that having more than one credit card has a terrible impact on your credit scores, is financially irresponsible or will lead to poor credit.
However, it is hard to believe that if you are responsible and well organized, that having multiple credit cards will have a negative impact on your credit scores. The secret to having good credit score is as simple as paying your credit card bills on time, in full and keeping your utilization ratio below 5%.If you follow these rules, the number of accounts you open will not have a negative impact on your credit scores.
You can also check your credit scores here for free.
It’s also a common myth that if you are not using a credit card, you should close it. But little do we know that the length of our credit history makes 15% of our credit score.
It may seem intuitive but cancelling a credit card can do more harm than good. Closing your accounts will decrease the average of your accounts affecting your credit score, hence the longer it stays open, the better your credit score.
To conclude, these myths are just that…MYTHS! It helps to know the facts so you can enjoy the miles & points, spending and traveling cheaply.