5 Common Credit Card Myths That Are Draining Your Wallet
Credit card is one of the most commonly used financial tools among the people. From purchasing any expensive items to paying your utility bills, these fancy looking electromagnetic cards can be used in several situations. And, the best thing about credit cards is that you get the leverage to buy now and pay later. These can be of great use when you are stuck in the middle of the financial crisis and you need urgent funds.
However, despite the amazing importance and benefits that credit cards provide to the holders, they are still a victim of many myths and misconception. There are many people who think that credit cards are full of scams and tricks that are specifically designed in a way to drain the money of the people. Well, this is not absolutely right because this is not the exact way how credit cards work. Here, in this blog, we have mentioned 5 major misconceptions related to credit cards that really need to be busted. So, let us see them one by one.
Myth#1:- You can exhaust the card when needed
The first and the biggest myth that people have is they think there is no harm in exhausting the credit card. Well, this is not true because having high due balance in the card can have a severe impact on your credit score. Now, impact on the credit score means affecting your creditworthiness and you might face a lot of difficulties to get a bigger loan in the future. Basically, exhausting the limit of the card will lead to an increase in the credit utilization ratio that simply determines how much money you are using against the limit given to you.
Myth#2:- Credit cards are not good
Now, there are many who just think that credit cards are not good and it is better to rely on hard-earned money. Using a card can make you greedy and you will end up building a bad habit of buying things without any genuine need just to increase your lifestyle. Now, the day when you start living beyond your affordability will be the day when you will start inviting problems. Well, this is half true and half untrue because it totally depends on the person who is using the card. If you are using the card only on genuine needs, then there will be no problem.
Myth#3:- Credit card debts cannot be cleared
Another misconception among people is that they believe that credit cards debts are very difficult to clear because of the high interest charged. Well, this is not true because the debts of the cards are paid just like the utility bills on a monthly basis. So, making the timely payment means that you won’t have to face any extra charges and your credit score will also be boosted. However, sometimes unfortunate events happen where they are under too many debts including credit cards as well. In such situations, you can go with debt consolidation loans with bad credit by contacting a reputed direct lender who specialises in such products.
Myth#4:- The lesser you use, the better will be your condition
Minimizing the consumption of credit card means better financial condition. Yes, it is true that you must use your credit cards only when there is a genuine need. However, this doesn’t mean that you should reduce your credit usage to the minimum or to zero. If you have taken a credit card, then keep the usage to the balance (around 30-50% maximum) not more than that. This will keep improving your credit score and you might even rewards and several other benefits.
Myth 5-: Having multiple credit cards can be dangerous
For certain people, a credit card is the synonym of debt. This means at the end of the day, you will have the heavy burden of your debt on your shoulder. This is the main reason why many people think that having multiple credit cards can lead to a huge problem. Well, the number of credit cards that you should own totally depends on your affordability. If you can manage the multiple cards, then only you should go with it.
So, these were the major misconception related to credit cards that are pulling the people away from using this helpful financial tool.