Busting Myths About Credit Cards

1. Do you believe that having more than one credit card is bad for your credit score?

Banks consider your "Credit Usage"—the amount of credit used versus your endorsed limit. Keep in mind, a Credit Card is just a line of unstable credit advanced to you by the bank. Assuming you use the majority of it consistently (for example, your credit use is high), it conveys a negative message, all things considered. This is valid regardless of whether you cover your entire bill, in full, consistently.

2. Do you believe that it is enough to make the minimum payments every month?

Many people have this habit. But did you know that paying off the minimum amount due every month will only save you the late payment penalty? This will not stop interest from being charged on the remaining outstanding balance. It is absolutely necessary to go through the terms and conditions of the card. Do you know that the interest is calculated from the date of transaction? You must always repay your entire balance by converting it into EMIs, if you cannot pay in full.

3. Do you feel that the annual fees of a credit card are expensive?

The majority of people are opposed to credit cards that charge yearly expenses. The idea is that why have a card for yearly expenses when there are credit cards available that are free or charge no fees? In any case, cards that charge expenses commonly offer much more prize focus and generally have a ton of tie-ups with different brands for limits and offers. They might be able to get you access to airport lounges and air miles. Many cards likewise postpone the annual charge in the event that your month-to-month or yearly spending crosses a specific breaking point. Being a smart user, you can utilize this to your potential benefit.

4. Do you think that an increased credit card limit is bad because it will make you spend more?

It's incredible if your bank automatically raises your credit card limit. It implies that you have been using your credit card in a financially dependable way and that the moneylender thinks you are a decent client. As made sense before, a higher credit cutoff will assist you in keeping a lower credit use proportion. Regardless of whether you really want a higher breaking point for your standard costs, it can prove useful in the event that you face a crisis and end up needing additional assets. Assuming that you fear overspending, you can set spending limits on your credit card.

We hope that the information we shared will help you become a smart credit card user. And if you need help with debt relief, you can always reach out to FREED!