Credit Cards: Myths and Facts Revealed
You probably have credit cards, but how much do you know about them? Credit cards can be the best tool in your arsenal for financial success with what they offer and what they don’t. This article will give you the facts on credit cards and help you understand them.
What Are Credit Cards?
A credit card can help you build up your credit score and make it easier to apply for loans and other financial products, but a credit card alone is not enough to achieve your financial goals. You first need to stick to a budget and plan for the future. Balances need to be paid in full each month, and credit card debt needs to be made a priority.
Top 5 Credit Card Myths
For many people, credit card debt is a frustrating and sometimes dangerous habit. But before you hand over your hard-earned cash to a credit card company, you should know the ins and outs of credit card use.
- Credit cards help you build credit
While credit cards can be useful in building credit, they aren’t the only way to do so. Consider a secured card, which is a credit card that requires you to put down a deposit. The deposit must be equal to the card’s limit, and you’ll typically pay an annual fee.
- Credit card charges are always higher than cash
It’s generally true that credit card charges can be higher than equivalent cash transactions. But that’s not always the case. If your bank allows you to set up automatic monthly transfers from your bank account to your credit card, you’re likely making purchases with a lower interest rate than if you just paid with cash.
- Accept any credit card offer you get
Most people get a credit card offer in the mail. But before you rush off to accept an offer, make sure you understand the terms before you agree to use the card.
- Always pay your bill on time
Paying your bill on time will help you build a good payment history. And a good payment history is one of the best parts of having good credit.
- Opening multiple credit cards will hurt you
Opening credit cards can hurt or help your credit, depending on how you use them. Experts recommend opening one or two credit cards over the course of a year as a responsible credit card user.
Credit cards are a convenient way to pay for things, and these days you have so many choices: cashback, airline miles, points, and rewards. But with all the credit talk out there, it’s easy to get caught up in the hype and not understand some of the basic information. One of the cards that you may not be familiar with is the Secured Credit Card. It’s designed to build credit and become a regular card in a short period of time. But before you apply, there are some facts that you should be aware of.
Top 7 Credit Cards Facts
Credit cards are an important tool for many of us, allowing us access to money that we may not have otherwise. But what do we know about credit cards?
- Credit Score: A credit score is a number calculated by a formula that takes into account many of the same things that mortgage lenders look at to determine loan eligibility. One key factor is your payment history. Paying on time every time will increase your score. Also, the amount of credit you have available will take time to build, so keep your credit card limits low until you’ve built up a solid history of paying on time.
- Credit Limit: Your credit limit is the amount of money you can borrow or “spend.” It’s important to keep your credit limit high, but be careful not to spend more than you can afford. Your monthly payment and interest charges may be too high for you if you do.
- Interest-free days: Credit cards offer interest-free days, or grace periods, to give you time to pay off the balance without accruing interest. For example, a 30-day grace period gives you 30 days to pay off purchases without paying interest.
- Rewards: Not all credit cards offer rewards, but some let you earn cashback for purchases.
- Minimum payments: Many credit cards have a minimum monthly payment requirement, and if you don’t pay this amount, you could end up paying interest on purchases.
- Balance transfers: Moving a purchase from a credit card with a lower interest rate to a credit card with a higher interest rate can potentially save you money.
- Business credit cards: Buying business supplies for your business? Business credit cards offer higher limits and can potentially save you money on business supplies.
Credit cards can be quite useful if you use them correctly. Many credit cards offer rewards, free transactions, and free elite status.