Approximately 70 percent of the adult population of the United States own a credit card, and most of them use their card(s) regularly. It’s weird then that so many of us know so little about the tiny rectangles of plastic that we don’t think twice about flexing whenever we feel like it.
There are so many myths surrounding credit cards that it can be hard for the average person to manage theirs effectively, and not only that but some of these myths can actually cause people distress by making their problems seem worse than they are.
So, to set the record straight, here are some of the most common credit card myths debunked:
Having Lots of Credit Cards is a Bad Thing
Having lots of credit cards that you’ve pretty much maxed out, and being in huge amounts of debt, is certainly a bad thing, but having lots of credit cards with low/no balance is not. Many people think that the more cards you have, the worse your credit score will be, but actually, the reverse could be true because if you have a lot of credit available, btu you’re only using a small percentage of it, that can certainly work in your favor, as can having lots of long-standing credit sources, So, if you have lots of credit cards that you don’t use, don’t go closing those accounts because they could actually make things worse for you in terms of your credit score!
Thieves Can’t Use Your Card if You Sign “See ID”
This one is becoming less of an issue now that many of us in many places pay via contactless methods or online but there are still a lot of people who think that if they write “See ID” in the signature box of their credit card, should it be stolen, no thief will be able to use it.
Of course, because of some of the methods of payment mentioned above and because clerks often don’t even look at that section let alone ask for proof, this really won’t help you at all. If your credit card is stolen, you should call up and cancel it immediately – that’s the best way to ensure that no one who shouldn’t be using it uses your credit card.
American Express isn’t a License to Spend
Because of its long-standing marketing slogan “No preset spending limits.” a lot of people think you can spend as much as you want on your Amex cards with no limits. This is not true because most Amex cards are no longer charge cards ( the kind where you could spend a lot as long as the balance was settled in full at the end of the month) and because American Express adjust credit limits based on how you use and manage your card. You can, of course increase your spending power by managing your card well, which is something you can find out more about at Marketreview.com, but it’s certainly not a given. So, if you don’t want to be embarrassed when your card is declined, stop believing this myth and read your AMEX paperwork.
Your Interest Rate is Your Interest Rate Period
Unfortunately, a lot of credit card owners think that the interest rate they are given when they apply for their card is immovable – set in stone forever. However, this is not the case, and they could be missing out. You see, if you are a good customer, who always pays on time and has a longstanding relationship with your card company, you can request a reduction in your rate, and there’s an excellent chance you’ll get it!
Applying for a Credit Card WILL Damage Your Credit Score
Okay, so applying for credit cards can hurt your credit score, which you can see at https://www.freescoreonline.com/, so this is sort of cheating, but not really because they don’t hurt it nearly as much as most people think and actually, if you only make one application, it probably won’t hurt it at all. It’s when you start applying for lots of credit cards/loans/etc. that all those hard credit enquiries start stacking up and causing suspicion. If you make a single enquiry, you can expect to lose less than five points from your score, and that’s if you use a company that doesn’t offer a pre-application test where nothing will be logged!
Now that you know these are simply myths, will you be able to manage your credit cards more easily? I hope you will find it much less difficult to navigate the somewhat choppy waters of credit and debt!