Getting a credit card may seem daunting, but it’s not exactly a horror movie disaster waiting to happen. Many people may tell you to don’t get a credit card, and these people may be hindering you from getting the best deals.
But getting a credit card can lead to many responsibilities. And some people have a different idea on how it works or how it should be used. Below are the most common misconceptions about credit cards. Feel free to study them up and make a better decision!
Credit card is free money
This is the number one misconception that younger credit card users do. They think that credit card is free money. Let us remind you that you definitely have to pay for your credit card and it’s not something that’s totally free.
Pay the minimum balance
Another misconception is that you only have to pay for the minimum balance of your credit card. Your credit card balance is not paid off until it’s paid off in full. This is one way credit card banks and companies earn their money, getting customers to maintain their balance while charging them with high interest rates on the remaining quantity.
No credit limit means the sky’s the limit
Many credit cards offer no credit limit in their promos. This can lead individuals to think that they can used their credit as much as they like on their accounts. While they’re wrapped up partaking in some serious delusion, sooner or later they will realize that their cards will be declined once they’ve maxed them out. What was that sound? Your credit score being knocked down several points. Be mindful on how you use your credit card. Responsibility is always key.
Opening a credit card may hurt my credit score
This is not true. Opening a credit card will only decrease your credit score by a handful points, usually about five points only. If you have a score that’s already in 700s, this is no big deal.
If you’re in the 500s – 650 range, then you must focus on making sure that you improve your score, and you likely won’t be eligible for many of the better credit cards. Instead, you may need to focus on a secured card first in order to improve your score.
You can only have one credit card
Yes, you can have more than one credit card. We guarantee that it won’t hurt your credit score. If you feel you can’t handle paying off bills on multiple credit cards because you’ll either forget about it, spent on too many unnecessary purchases, get overwhelmed, then stick with one.
For those who are organized enough, responsible enough and maybe like to take advantage of cash back rewards – then go ahead and get that extra Citibank credit card that you’ve been eyeing for a long time.
Be extra careful on how you use your credit card. Remember that this may affect your credit history and of course your financial status. Research and do your home work.