11 myths about credit cards


Have you always thought that making a single late payment on your credit card isn’t a big deal (it’s just one, right?). Well, the truth is, even one missed payment can hurt your credit score, despite what your forgetful roommate told you!

Credit card myths like this can wreak havoc on your finances, which is why identifying and avoiding them is so crucial.

Luckily, I’ve saved you the trouble by rounding up some of the worst offenders and putting them in their shoes! Learn from them and your bank account will thank you.

1. Getting a credit card will hurt your credit score

A credit card, if used responsibly, is one of the best tools for building or improving your credit score. By making regular purchases with your credit card and paying off the balance quickly, you can greatly improve your creditworthiness.

2. Closing a credit card account with unpaid debts can improve your credit rating

False. Closing a credit card account with unpaid debt doesn’t magically erase these transactions from history and allows you to start over. These damaging details can stay on your credit report for up to seven years.

3. Balance transfers save you money

Not always. Sometimes the balance transfer fee can be high enough that the arrangement is not financially feasible. Low or zero interest rates on balance transfer cards also have a short window of opportunity, after which the (often extremely high) default rate kicks in.

4. Having a balance on your credit card improves your credit score

Nope. Simply maintaining a balance on your card will not upgrade your credit. However, keeping your card active with sporadic purchases is a wise move because it shows lenders that you are using credit. A monthly or quarterly transaction will suffice.

5. You must pay the fees indicated in your credit card contract.

Surprisingly, credit card companies may be willing to work with you to lower your fees, but it’s up to you to start the conversation. Be reasonable, friendly, and courteous when negotiating, and you could win a lot.

6. A missed payment will not lower your credit score

Wrong! Even a single missed payment can cause significant damage to your credit score. This is especially true if you previously had an impeccable payment history – the higher your credit score, the harder it would fall. And the later the payment, the greater the impact on your credit score.

7. You can build up credit quickly once you get a credit card

Never. Building a strong credit profile is a gradual process. It can take months or years and depends on your situation. Your credit score reflects your ability to manage bill payments and other credit products that you currently use, such as personal loans and lines of credit. A credit card is just one piece of the puzzle.

8. Your APR will never increase

Not necessarily. Your APR may very well increase over time. It may be due to a change in the policy of your card issuer, in which case you are powerless to do anything about it. Other reasons for APR hikes include an expired introductory rate or a drop in your creditworthiness.

9. Getting multiple credit cards won’t affect your credit score

It will be. Whenever you apply for a credit card, the card issuer will perform a thorough check on your credit. Essentially, this means that they will access your credit report to assess your creditworthiness (the risk of lending you). Accumulating too many credit checks in a short period of time negatively affects your credit score, as lenders will perceive you as desperate for credit and more likely to default.

10. You can spend as much as you want as long as you pay off the balance on time

Not without unpleasant consequences. Excessive use of credit can seriously affect your credit score, as it is one of the factors that credit bureaus assess when establishing your credit score. Going over your credit limit isn’t safe either, as you can incur over-limit fees and a costly APR penalty if you don’t pay on time.

11. Credit cards are less sure debit cards

Not necessarily. Credit cards generally come with superior security and liability protection features compared to debit cards. Since credit cards are essentially thief magnets, card issuers have no choice but to react accordingly or risk losing customers. The federal government agrees: if you are the victim of fraudulent transactions, federal law limits your payment liability to $ 50.


This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .

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