Myth VS Fact: The Untold Truth about Credit Cards

Credit Cards were introduced to give an uninterrupted buying experience. But today, several myths have revolved around these facilities, swaying customers away from credit cards like an allergic perfume. 

 

At Humann we have decided to unwrap the truth about credit cards and solve some common misconceptions. We shall talk about the seven most common myths and the actual facts that should be believed. Without further ado, let's get started! 

 

#1 “Having multiple credit cards will hurt your credit score” 

Fact: While having too many credit cards can potentially affect your credit score, it's not the number of cards that's the issue but rather how you manage them. Responsible use of multiple cards can actually improve your credit score by showing a variety of credit types and responsible credit management.

 

#2 “Carrying a balance helps your credit score” 

Fact: Some people believe that carrying a balance on their credit card helps their credit score. In reality, carrying a balance only results in paying unnecessary interest charges. You can build your credit score by using your credit card regularly and paying off the balance in full each month.

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#3 “Minimum payments are enough”

Fact: Making the minimum payment on your credit card may keep your account in good standing, but it will also result in paying more interest over time. Paying more than the minimum can help you pay off your balance faster and save money on interest.

#3 “Closing a credit card will improve your credit score” \

Fact: Closing a credit card account can actually harm your credit score, especially if it's an account with a long history or a high credit limit. It's often better to keep the account open and use it occasionally to maintain a positive credit history.

 

#4 “Credit cards are only for emergencies”

Fact: It's important to have emergency savings for unexpected expenses, however, credit cards can also be useful for everyday purchases and building a credit history. Using a credit card responsibly and paying off the balance each month can help you earn rewards and improve your credit score.

#5 “Applying for multiple credit cards at once won't hurt your credit score”

Fact: Each time you apply for a new credit card, a hard inquiry is placed on your credit report, which can temporarily lower your credit score. Applying for multiple cards within a short period of time can signal to lenders that you're a higher-risk borrower.

 

#6 “You need to carry a balance to earn rewards” 

Fact: Many credit card rewards programs offer cash back, points, or miles for every buck you spend, regardless of whether you carry a balance or pay it off in full each month. Carrying a balance will only result in paying interest charges, which can negate the value of any rewards earned.

 

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Wrapping it up! 

 

Busting these myths was fun, wasn’t it? 

 

At Humann, we focus heavily on making purchase decisions easier for consumers. Credit cards are heavily misunderstood due to some of the risks that they bring along. But if used wisely, you can create a better impact on your credit score and financial growth. 

 

With that being said, let’s wrap up this blog. And remember, you can always reach out to us in the comments if you have any other queries! Until then, stay tuned and stay connected. 

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