Can you imagine your life without credit cards? Not sure. While many claim we should get rid of all our credit cards, having one card will not hurt. Let’s not forget that Walter Cavanagh has 1,497 credit cards and he is not broke.
I am definitely not promoting to have tons of credit cards, but if you have one, make sure you do not believe in these common credit card myths that can prevent you from taking a full advantage of your current credit card.
1. Credit card is a source of constant debts
This is partially true. On the one hand, it is hard to stop buying things when you know you ‘have’ money. On the other hand, when you use your credit card responsibly, it can make your life easier. If you know that you can pay back at the end of the month, why not take advantage of it?
2. You should never pay down 100% of the balance
Credit cards save us in the most unexpected and difficult situation, so having the one is a great idea. Many people believe that if they pay down 100% of the balance, they risk having a bad credit score. It is a myth.
Unless you pay your credit card bill late or do not pay it at all, your credit score will keep increasing. Never miss your credit card bill’s due date and never buy anything expensive when you know that you have no money to pay even your minimum.
3. Cancelling your credit card affects your credit score
I have cancelled my credit cards many times, and it has never affected my credit score. If you do not use your credit card, and you are sure you will not need it down the road, cancel it. If you do not keep a balance, your credit score will stay the same. However, if you do keep a balance, make sure you pay it down before cancelling your credit card.
4. Having more than two credit cards is a disaster
There is a reason a lot of people have more than one credit card these days. First of all, because of bonuses that credit cards offer. You will not hurt your credit score if you open several credit cards to get those bonuses.
But if you have trouble splurging on the things you do not actually need, or your partner has a tendency to spend money on bad habits like drinking or smoking, it is best to cancel all of your credit cards. It is so easy to spend money, but it is so hard to earn them and give them back to the bank.
5. Opening a credit card to get the rewards is a bad idea
Again, if you have a strong self-control, why not? After all, you can get a plane ticket for your summer vacation for free, and then get another ticket for a spontaneous trip for free. Even though these bonuses and rewards are just smart marketing tools to get people to use the credit card more often, there is still an advantage to take.
Credit cards are not our enemies. They can be our friends too. All we should do is to learn how to use a credit card responsibly. I am definitely not suggesting you have dozens of cards. If you need them, it is okay. If you never use your credit card, cancel it. That’s it. Is your credit card your enemy or friend?