Addressing Common Myths About Credit Cards

Credit cards are very popular for a reason. They have made life extremely convenient and are easily accessible to almost everyone, --from students to retired people. In addition to providing a range of rewards and exclusive experiences, they also help to build your creditworthiness.

There are a lot of false beliefs around credit cards that many of us encountered. For instance, a lot of individuals think that having several credit cards will always lower your credit score or that you need to have a balance in order to establish credit.

I can speak from personal experience when I say that using numerous credit cards responsibly will raise your credit score, and paying off your entire debt in full can help you avoid incurring interest.

What other common misconceptions regarding credit cards have you come across? Have any of these myths been proven to be false by personal experience? Together, let's dispel these fallacies and discuss what we've learned!

1 Misinformation regarding credit cards is widespread, so get the facts and don't believe everything you hear.

2 Following bad advice or believing the wrong information can lead to decisions that might damage your credit.

3 Use caution when gathering information about credit cards; utilise government and corporate websites where you can confirm their authenticity.

Please share your experiences here regarding credit cards.

Drawing from my experience, I’d like to address some of the most popular myths about credit cards:

Myth #1: Carrying a Balance Improves Your Credit Score
Fact: Carrying a balance doesn’t improve your credit score. In fact, paying off your balance in full each month is far better for your credit health and helps you avoid unnecessary interest charges. I've always paid off my balance in full, and it has significantly benefited my credit score.

Myth #2: Closing Old Credit Cards Improves Your Credit Score
Fact: Closing old credit cards can actually harm your credit score by reducing your overall credit limit and shortening your credit history. I learned this the hard way when I closed one of my older cards, thinking it would help, but it actually had the opposite effect.

Myth #3: Credit Cards Lead to Debt
Fact: While it’s true that credit cards can lead to debt if misused, they are a tool that can be managed responsibly. By paying off balances in full each month, you can enjoy the benefits without falling into debt. Personally, I’ve used credit cards for years without carrying debt by sticking to a strict payment routine.

Myth #4: Credit Cards are Unsafe and Prone to Fraud
Fact: Credit cards often offer better fraud protection than debit cards. Most issuers have zero liability policies for fraudulent charges, which has given me peace of mind knowing I’m protected. However one must be careful with all financial products whether its a Debit / Credit / UPI / Net Banking etc. and keep your Mobile Phone safe as today everything is linked to your phone.

Myth #5: Paying the Minimum Payment is Sufficient
Fact: Paying only the minimum amount can lead to high-interest charges over time. It's best to pay off as much of the balance as possible to avoid accumulating interest.

These common myths highlight the importance of understanding how credit cards work to use them effectively and responsibly. What other myths have you encountered, and how have you navigated them? Let’s share our experiences and help each other make better financial decisions!

Very Interesting And Important Information About Credit Cards

Unfortunately I Don't Use Credit Cards

I Only Have One Debit Card

I Save Money On It And Use It To Buy Things Then Pay It Off Immediately To Avoid Late Fees

Originally posted by: SilverBell

Very Interesting And Important Information About Credit Cards

Unfortunately I Don't Use Credit Cards

I Only Have One Debit Card

I Save Money On It And Use It To Buy Things Then Pay It Off Immediately To Avoid Late Fees

Thank you for sharing your approach to managing your finances! Using a debit card and paying off purchases immediately is a smart way to avoid late fees and interest charges. It’s great to see that you have found a method that works well for you.

If you’re ever curious about credit cards and how they might offer additional benefits such as rewards or building credit history, feel free to ask. There's a lot of useful information out there that can help you make an informed decision if you decide to explore that option in the future.

Keep up the good financial habits!

These little plastic cards have single-handedly made the whole buy-now-pay-later culture possible.

As per records pertaining to the year 2019, around <52> million Indians owned credit cards. That number has only been on the rise, and with the pandemic making digital payments the need of the hour, the spotlight on Credit Cards has grown stronger. Interestingly, there are many misconceptions about this nifty little financial product.

Let’s bust some more myths surrounding Credit Cards:

Myth #1: Interest Is Charged Right From The Day Of Purchase

This is a popular myth believed by most. However, this is not true. All Credit Cards, come with an ‘interest-free grace period’ during which interest is not charged on your purchases. The time period between the end of your Credit Card billing cycle and the credit card payment due date is known as the ‘interest-free’ grace period.

Therefore, if you pay your Credit Card bills on or before the due date, no interest will be charged on your purchases. Interest starts only after the due date. However, this applies only to purchases made on your Credit Card and not to cash withdrawals. In the event that you use your Credit Card to withdraw cash, interest starts to accrue immediately and continues until the date of the payment.

Myth #2: Credit Cards can make you spend impulsively

This is another myth doing the rounds ever since Credit Cards came into existence. While Credit Cards do make it extremely easy and convenient to purchase goods and services, they don’t make you a spendthrift. Spending impulsively only serves to signify a lack of financial discipline and cannot be attributed solely to Credit Cards!!

For instance, a financially disciplined individual with responsible spending habits is very unlikely to go on a spending spree. Nevertheless, if you still feel that Credit Cards may make you spend impulsively, you could always make use of budgeting to inculcate responsible spending habits!!

Myth #3: It’s Enough (and Even Ideal) To Have Just One Credit Card

Credit Card issuers generally tend to collaborate with different brands, service providers, and retailers. This allows them to offer their customers exclusive deals, discounts, promotions and specialised offers. A single Credit Card may not be able to offer you the combined benefits from multiple brands and service providers.

By just having one Credit Card in your kitty, you might actually be missing out on several attractive discounts and offers. With multiple credit cards from different issuers, you actually increase your chances of enjoying access to a wide-range of deals and promotions from various brands and retail outlets.

Myth #4: It is Not a Good Idea to Enhance Your Credit Limit

One of the primary reasons for the propagation of this myth is that an enhanced credit limit would only serve to increase the amount of spending by the card holder. Again, this is not true, as it boils down to the individual’s own level of financial discipline.

If you’re reasonable when it comes to Credit Card utilisation, there’s absolutely no need to fear a credit limit enhancement. On the other hand, an enhanced credit limit would only serve to help you in times of dire need and other emergencies by giving you the freedom to mobilise liquid funds instantly.

Myth #5: Free Credit Cards Are The Real Deal

While Credit Cards with no annual fees are still a great option, they may not always carry benefits such as reward points, frequent flyer miles and airport lounge access. These exclusive benefits are generally offered only by Credit Cards that charge an annual fee.

And to top it all, Credit Cards that charge an annual fee usually tend to waive it off once you exceed a certain specified spending limit for the year. This effectively makes them free. With so many benefits on offer, it makes little sense to only stick to free Credit Cards and overlook the others.

So, what we understand from this is that, when used prudently, Credit Cards can help you achieve financial freedom. Like any other financial product, they need to be used with proper planning.

Apne pass toh credit card hi nahi hai, berozgaar praani hai hum

From what I have heard and discussion that i have had, here are some myths:

1) first myth that i had heard when i was getting my 1st credit card was that applying for a Credit Card Will Destroy Your Credit Score: While applying for a new credit card results in a hard inquiry that might slightly lower your score, but this effect is temporary and the hard inquiry goes away eventually.

2nd most myth i have heard is checking your credit score daily will lower your credit score. Its not true, in reality, checking your own credit score is considered a “soft inquiry” and does not affect your credit score. Only “hard inquiries,” such as when a lender checks your credit for a loan or credit card application, can potentially lower your score.

All rest have been covered here so i wont repeat it

Thanks for this topics.

Originally posted by: Viswasruti

These little plastic cards have single-handedly made the whole buy-now-pay-later culture possible.

As per records pertaining to the year 2019, around <52> million Indians owned credit cards. That number has only been on the rise, and with the pandemic making digital payments the need of the hour, the spotlight on Credit Cards has grown stronger. Interestingly, there are many misconceptions about this nifty little financial product.

Let’s bust some more myths surrounding Credit Cards:

Myth #1: Interest Is Charged Right From The Day Of Purchase

This is a popular myth believed by most. However, this is not true. All Credit Cards, come with an ‘interest-free grace period’ during which interest is not charged on your purchases. The time period between the end of your Credit Card billing cycle and the credit card payment due date is known as the ‘interest-free’ grace period.

Therefore, if you pay your Credit Card bills on or before the due date, no interest will be charged on your purchases. Interest starts only after the due date. However, this applies only to purchases made on your Credit Card and not to cash withdrawals. In the event that you use your Credit Card to withdraw cash, interest starts to accrue immediately and continues until the date of the payment.

Myth #2: Credit Cards can make you spend impulsively

This is another myth doing the rounds ever since Credit Cards came into existence. While Credit Cards do make it extremely easy and convenient to purchase goods and services, they don’t make you a spendthrift. Spending impulsively only serves to signify a lack of financial discipline and cannot be attributed solely to Credit Cards!!

For instance, a financially disciplined individual with responsible spending habits is very unlikely to go on a spending spree. Nevertheless, if you still feel that Credit Cards may make you spend impulsively, you could always make use of budgeting to inculcate responsible spending habits!!

Myth #3: It’s Enough (and Even Ideal) To Have Just One Credit Card

Credit Card issuers generally tend to collaborate with different brands, service providers, and retailers. This allows them to offer their customers exclusive deals, discounts, promotions and specialised offers. A single Credit Card may not be able to offer you the combined benefits from multiple brands and service providers.

By just having one Credit Card in your kitty, you might actually be missing out on several attractive discounts and offers. With multiple credit cards from different issuers, you actually increase your chances of enjoying access to a wide-range of deals and promotions from various brands and retail outlets.

Myth #4: It is Not a Good Idea to Enhance Your Credit Limit

One of the primary reasons for the propagation of this myth is that an enhanced credit limit would only serve to increase the amount of spending by the card holder. Again, this is not true, as it boils down to the individual’s own level of financial discipline.

If you’re reasonable when it comes to Credit Card utilisation, there’s absolutely no need to fear a credit limit enhancement. On the other hand, an enhanced credit limit would only serve to help you in times of dire need and other emergencies by giving you the freedom to mobilise liquid funds instantly.

Myth #5: Free Credit Cards Are The Real Deal

While Credit Cards with no annual fees are still a great option, they may not always carry benefits such as reward points, frequent flyer miles and airport lounge access. These exclusive benefits are generally offered only by Credit Cards that charge an annual fee.

And to top it all, Credit Cards that charge an annual fee usually tend to waive it off once you exceed a certain specified spending limit for the year. This effectively makes them free. With so many benefits on offer, it makes little sense to only stick to free Credit Cards and overlook the others.

So, what we understand from this is that, when used prudently, Credit Cards can help you achieve financial freedom. Like any other financial product, they need to be used with proper planning.

Yes Credit Cards Are Good To Have But Iam Not Ready For One Yet

In The Future I Will Have Just One Credit Card