Different Credit Card Myths You Must Know About

Different Credit Card Myths You Must Know About

by

Amyj

There are different credit card myths which may be costing you your good credit reputation and credit card security. It is important to know about these common misconceptions so you are equipped with the knowledge you need.

1st Myth: Credit cards are guaranteed to improve your credit score

This myth depends on how you handle your credit card. Always remember the intended use of credit cards is the ability to make purchases right away; borrowing money from the credit card companies and paying back the debt with interest for an agreed time period. Your credit card repayment history comprises 35% of your overall credit score. If you pay your credit card debts in a timely fashion, you can likely raise your credit score. But if you cannot maintain good repayment habits, your credit score can plummet to the low score range. Therefore, credit cards cannot guarantee you an improved credit score, because it ultimately depends on how you handle and pay your debts.

2nd Myth: Making minimum payments on your credit card balances is a good thing to do.

When you make minimum payments on your credit card debt, you re only paying a partial portion of your actual debt plus the interest charges. Though it is a good way to ensure you won t miss your payments and can maintain a good credit score rating, it does not really rid of your credit card debt. When another billing cycle comes and you still pay only the minimum amount, you re just collecting exorbitant debts from interest. If you make this a habit you ll never get out of your credit card debt. The only thing which helps you get out of debt is paying your balances in full each month so you re saving money by not paying interest charges.

3rd Myth: Credit cards with no credit limit means you can spend the way you want.

There are credit card companies that offer attractive no credit limit credit cards to customers. It can make card holders think they can build up as much credit card debt as they want without having to worry about exceeding their limit. The truth is all credit cards have limits, even these NPSLs, known as a No-Preset Spending Limit. They merely have higher credit limits than other standard credit cards and credit card companies aren t disclosing the exact limit to their clients. You may find yourself surprised when you use your credit card and find it declined because you have exceeded your limit on your no credit limit card, ultimately lowering your credit rating.

4th Myth: As long as you have a credit card, you are safe from thieves

Honestly, you are only safe from traditional pickpockets stealing your credit cards if you keep your credit cards by your side. Even so there are other ways your card s information can be stolen from you, such as

credit card fraud and credit card scams

. For example, when you use your card to pay for purchases in restaurants, your card may be swiped on a handheld payment device. In this case, a thief within the restaurant can use a handheld machine to completely copy the data just extracted off your credit card. This device is known as a skimmer or skimming machine. All the data stolen from your card will be transferred to a blank credit card, which will then be used by the thief to make fraudulent purchases in your name. Keep this information in mind, so the next time you use your cards for transactions, you won t let it out of your sight for long allowing enough time for it to be swiped in a skimming device.

Amy is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. She also covers topics on

how to be credit secure with credit monitoring

and the

importance of checking your credit report

.

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ArticleRich.com