Five Myths About Credit Cards You Don’t Need to Believe

Published on March 30th, 2015 | by

Five Myths About Credit Cards You Don't Need to BelieveOne of the biggest credit card myths is that owning a credit card will automatically ruin your credit. Think of a credit card as a tool. While a credit card can make it easier for you to fall in debt, it can also help improve your credit. Making timely, concise payments will help bolster your credit rating, which will then make it easier for you to be pre-approved for loans and other offers moving forward.

Credit card myths are everywhere, but you can uncover the truth if you learn how to use them the right way. Here are the top 5 myths on credit cards.

1. Credit Cards Only Produce Debt

study conducted by Dun & Bradstreet found that consumers who use credit cards spend an average of 12-18% more than people who only use cash. While credit cards can make it easier for you to accumulate debt, when used correctly they can be a great instrument in helping you to also improve your overall credit.

There are times when you cannot help a little overflow, but if you make the effort to pay your outstanding balance every month, you’ll be in good shape.

2. Credit Card Rewards Are Useless

One of the biggest perks in owning a credit card is the various reward programs they offer. You can take vacations with your earned points, get discounts at frequently visited stores and even cash-back bonuses. Businesses can use these same rewards to benefit their office or their bottom line.

The trick is taking advantage of these rewards without letting them change your spending habits. Rewards should be seen as an added bonus, not as as goal. The last thing you want is to be buying things you don’t need just to take advantage of rewards.

3. Business Cards Are the Same as Personal Cards

You don’t have to own a business to own a business credit card, but it certainly helps. A business credit card is far different from a personal account, as business credit cards usually have higher interest rates and higher credit limits. This is because they’re best for quick, big purchases, which may not be in the best interest of consumers.

4. Credit Card Interest Rates Never Change

One of the easiest ways to fall in debt is by not being aware of your card’s changing rate. Your credit card interest rate will change often if you are on a variable card. If you’re dealing with extremely high interest rates and aren’t sure how to tackle them, take a look at Creditguard.org. They’re a nonprofit organization that’s devoted to helping people get out of debt. In fact, they’ve been able to save consumers over $1.7 billion and counting.

5. Carrying Credit Cards Is a Bad Idea

Sometimes credit cards really come in handy, especially when you’re in a pinch. You can carry the card to only use for emergencies or long vacations. When you get paid at the end of the month, you can make the payment for the full balance.

Credit cards are not all bad, and you need to ignore the myths about credit cards that are not correct. Use them to your advantage and do your research to find ones that will actually help improve your financial situation.

[This post was generously supported by Credit Guard. Image: Thomas Kohler under CC license.]


About the Author

lives in southwestern New Mexico and digs bicycles, simple living, organic gardening, sustainable lifestyle design, slacklining, bouldering, and permaculture. He loves good food, with fresh roasted chiles at the top of his list of favorites. Catch up with Derek on Twitter, RebelMouse, Google+, or at his natural parenting site, Natural Papa!