5 Myths about Credit Cards

5 Myths about Credit Cards

If the credit cards are good or bad for an individual user in particular, or for the economy in general, is something debatable. But there are a lot of myths floating around about credit cards. With the examples presented below, I’m trying to separate, as much as I can, the facts from the fiction.

Credit cards are available only if you have great credit. This is definitely false, the credit cards being accessible to people with solid credit histories and, also, to the ones who have either average credit, bad debts or no credit history at all. If you happen to be in one of these situations, you can consider as an alternative a prepaid debit card. This card can be used anywhere as a credit card and if you pay consistently your balance each month, you will end up by improving your credit score.

A credit card with no-limit allows you to buy whatever you want. This is false, most of the credit cards having credit limits established. While some cards are advertised as having no spending limits preset, this is more marketing hype than reality. These cards have also limits that are typically set up based on the incomes of the borrower and the spending patterns.

By using the credit card you save money. This is not entirely true, since if you don't pay off your monthly bills, you will have to pay extra money in order to cover the interest charges. And if you just make the minimum payment every month, it will take more than 10 years in order to pay off the entire credit limit.

You can close your credit card account by simply cutting it up. In reality, if you want to close your credit card account, use your phone and not your scissors. It is a simple procedure; speak with a customer service representative from your credit card issuing company who can help you close the respective account.

Closing your credit card account will remove it from the credit reports. This is also, false. Finance credit reports and collections keep track of the old credit card accounts, and of your behavior. All previously closed accounts will be listed on your credit report, stating that they are closed by the customer.