Credit cards are known for easy accesses to money interest-free debts, reward points and much more. With the advent of technology in transacting money, credit cards occupied a pivotal role in making the monetary transactions more convenient and comfortable. Having the credit cards handy will benefit the user in many ways like no to bundles of cash, no messed up accounts, availability of credit in emergencies, build positive credit and much more. Still few myths are keeping the people availing credit card. The current article lets you know about the myths that are involved while availing credit cards.
Misconceptions about the Credit Card- Know the Truth
Having additional credit card affects credit score
The credit report will reflect the number of credit cards you have applied for, but having multiple credit cards will not affect your credit score. Having new credit card in the wallet will not affect credit score but, it is not advisable to apply for credit card each month because an excess of anything is bad.
Earn rewards in spite Credit card balance
It is not a good idea to pay minimum balance every month. You will be liable to pay interest on the revolving credit. When you use the card to make purchases with a minimum payment every month, you will have not any restriction on earning the reward points and redeeming them. The benefit you get by redeeming the reward points is much less than the interest you pay on the outstanding balance. Make a point to pay off the credit card balance in full and enjoy the benefits of reward points.
Cancelling unused credit card improves credit score
Credit card offers instant assistance to emergency funds. Having multiple credit cards is not a bad idea. It is a myth that closing the unused credit card improves your credit score. Instead, you can keep the account open and stay away from using it. The credit score is impacted by the credit you are using. Having unused credit cards in your account will have a positive impact on credit score because you are not using the credit in spite of its availability.
Reward points are paid by you
Most of the credit card users are under the misconception that reward points are paid by you. Customers are reluctant to accept that good thing happen for free. In this case, the scenario is different. The credit card company is rewarding you with some points for free for paying the bills on time.
Lower credit limit is solution to problems
There is no doubt in the fact that having the credit card with high limits increases your purchasing power and tempts you to purchase things beyond your income. In this case, people think that having the credit card with the lower limit is a solution to all credit problems. Absolutely no, having higher credit limit will improve your credit score. Rather than reducing your credit limit, you should work on controlling urge for impulsive decision.