Rifling through your wallet, you’re likely to find an array of cards you might use for spending on certain products. Your main debit card is likely to be for regular shopping, such as for groceries, rent and utility bills. As for more peripheral goods such as presents for the family, you might have one or two credit cards handy to help take the strain, especially at this time of year.
Taking out a credit card is something that seems almost second nature to millions of us, but what should we know about them and do they offer as much value as we’re led to believe? With that in mind, here are three of the biggest credit card myths:
Credit Card Applications Can Impact Your Credit Rating
This isn’t the least bit true, fortunately. One of the main credit agencies who determine everyone’s credit score will take note of your application, but it doesn’t change your credit worthiness, regardless of whether you’re accepted or denied a card by a lender. You can check your credit rating whenever you want; it’s a good idea to check it before applying for a credit card so you can be sure that you will be accepted. You can check your credit report with any of the major credit providers, such as Experian.
About keeping on the financial straight and narrow, a spokesperson from Yorkshire Building Society suggested: Set up a regular savings account and shop around to make sure you get the best rate. Ensure that you are on the electoral roll as this can improve your credit score. Review your day-to-day spending to see if you can make any cuts to increase your savings, then set up a budget for essentials and stick to it.
Bonuses such as air miles and hotel points — which are usually on offer with selected credit cards — might seem appealing, but many skeptics will say that they don’t have any financial value. Although they’re not worth a huge amount, if they build up over time, they might help you save a little money on something like a meal at a restaurant or the weekly shopping — so read the small print to be sure.
It’s Okay to Pay Back What You Can
If you don’t have enough money to meet your credit card repayments, then paying back what you’re actually able to might seem fine. Unfortunately, that’s not true. Every credit card provider asks that you pay the minimum amount stipulated in order to prevent being fined or asked to pay more than you bargained for. Not meeting it could have dire consequences for your credit rating.
Negative Credit Information Can Be Removed from Your Report
This isn’t true either. Any negative (or positive) information remains on your credit report for a period of seven years. This means that any negative stuff on your report must be given time before you’re in the clear.
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Wow…..not a single mention of ‘cash back’ cards.
Last year, we got $382 back on our Amazon Visa that we put almost everything on. While not a huge amount of cash, using a debit card or writing checks means that would have simply disappeared. Far better in my pocket than someone else.
And no…we never carry a balance, paid off monthly. And no, never ever paid a dime in interest.
And no, always a no annual fee card.
Now that Marriott is devaluing their points, I am moving to a cash back card myself, Andy.
I have a handful of credit cards , three each at two major banks and a handful at reputable stores. All are at zero balance or will be in the next 3 days. I don’t buy anything that I don’t have the ability to pay cash for. My FICO is 824. I read a lot at personal financial sites, some of which ( Dave Ramsey) say all credit cards are bad. It seems to me responsible credit card use works fine. As a point of honor, I also never pay a cent in interest
Recently, I walked into IKEA, punched a couple buttons on a Kiosk and was handed $6,000 in credit in under 5 minutes.
Just be responsible or maybe borderline paranoid about bills and credit cards work for you .
Dave Ramsey teaches credit cards are bad for people who have problems with using them responsibly. If you have the personal financial fortitude to use them exactly as needed to earn cash back and never overextend yourself, that is commendable. 😀
Lots of people do not have that level of focus.
I have two rewards cards. One earns money off the purchase of a vehicle. It took way over $2k off the purchase of a vehicle. The other has rewards certificates I can use at any of the four different chains they own. I just bought a super heavy hoodie for a friend at 66% off, a heavy shirt, and some other stuff at Sierra Trading Post. Even the tax was paid for with rewards certificates.
I think the key is don’t spend more than you would if you were spending cash in hand, always pay off your monthly balance, and don’t spend just to get rewards.
They come in handy when traveling, and when sudden high auto expenses occur. I have the cash in savings but it takes a couple of hours to get it credited to the checking account. If I write a check, it deducts it automatically right then.
Just because you can buy something with a credit card doesn’t mean you should.
You can buy a lot of fruitcakes on a credit card, and make payments until the debt is gone. You really shouldn’t do it.