Finance

What are the various common myths about your credit cards?

Many times while cutting down on your expenses, you must have thought of credit cards as your saviour. A credit card can be really tempting in times of problem. It can be your only solution when you are looking out to save money.

Debunking the credit card

Many people do not take credit cards as they have some myths about credit cards. It is advisable to clear all your myths and then use your credit cards. If used effectively, credit cards can prove to be a boon for you and also help you save money for your future.

Several individuals who have myths about credit cards prefer borrowing loans instead. Although there are loans available, they can be an expensive deal. You can borrow various loans, such as 12 month loans with no credit check from direct lenders.

These loans are not difficult to borrow and do not have many burdens. But every loan requires timely repayment and should be taken care of within time. The same thing applies to your credit card bills too.

Common myths

MYTH: If you own a credit card, it will improve your financial standing

FACT: Many people believe that owning a credit card will help you improve your financial standing. You may have heard many people telling you that you can build up your credit rating by using a credit card at a young age.

Having a credit card in your pocket will increase your credit rating. But this is not true. Your credit rating is determined by various other factors along with your credit card.

For example, if you have a student mortgage or a loan and do not fulfil it, this can also lead to a bad credit rating. Various loans offer you leverage, such as 2000 loans for bad credit.

If you repay your loan on time, it will increase your credit rating. Also, your credit rating depends on the times you have applied for the loan.

Your credit application also depends upon the amount of time that you have applied for the loan. If you have a loan burden on you and you cannot fulfil that burden, it may lead to bad credit history.

If you have a credit card and are unable to pay off and afford that red card, it can negatively affect your credit and savings.

MYTH: If you are associated with any bank, there are high chances of you getting a credit card

FACT: It is commonly believed that if you are associated with any bank, it will be easier for you to get it corrected from that bank. Whereas, on the contrary, every bank has a specific process to issue a credit card.

If you do not go through that approval process, you will not be guaranteed a credit card by the bank. These banks process your application and analyze your financial status.

If you have a bad financial status, you may be denied a credit card. Sometimes, your current bank may limit your box as an existing customer.

On the contrary, some of the banks may exceed your perks as an existing customer. These conditions depend on the bank for which you are using a credit card.

MYTH: In the case of your credit card, the only minimum payment is required

FACT: This is the biggest with that you only have to pay the minimum amount on your credit card. If you are thinking to own a credit card, you have to be fully aware of the payment technicalities.

You cannot avoid making credit card payments. And instead, you have to make those payments in full. Making minimum payments will never solve your problem and can increase your debt over the years.

Having a credit card that can burden your finances may make you overburdened with debt. It may also collect interest over here that may be difficult to repay. Hence, pay your credit card debts in full and be debt-free.

MYTH: If you miss out on a payment, it will not impact your credit rating

FACT: You may have heard many people saying that it will not impact your credit card rating if you miss the credit card payment. It is absolutely wrong. You are missing out on payment of your credit card or any that will badly impact your credit score.

Do not avoid any of the payments to keep your credit score intact. Your credit score depends on your borrowing history and also your financial activities. These activities are studied over a period of time, and then your credit history is created.

It is essential to stay on top of things. Otherwise, it can limit your financial borrowings in future. You can set up a direct debit as it will help you to prevent forgetting any kind of repayments.

MYTH: The interest on your credit card is immediately applicable after you make a purchase

FACT: Many people believe that once you make payment from a credit card, the interest is immediately applicable. This is a wrong notion. There is a specific payment date for the interest of your credit card.

At a specific date, the interest starts to accrue. You can avoid paying interest for one particular period of time, but you have to pay the interest on your credit card after a certain period.

The interest rate doesn’t start after your purchase makes it lucrative for borrowing facilities. However, if you are going for cash withdrawals, this strategy doesn’t apply. The interest rate is charged from the very next moment of your cash withdrawal.

 

Conclusion

Many people have several myths relating to their credit cards that they do not bother to debunk. If you are using a credit card, it is essential to know all the technicalities and guidelines.

You can look out for various myth busters to use your credit card in a carefree manner. Also, these myths can stop you from making efficient use of your credit card in the long run.

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