There are many myths floating around about credit cards and the best techniques for using them. Believing these myths about credit cards can leave you with high debt levels and cost you a significant amount of money that you may be paying off for years. Here are some of the most common myths about credit cards and why the myths should be ignored.
Paying With Credit Costs The Same As Paying With Cash
Many people believe that their purchase will cost them the same amount of money regardless of whether they pay with cash or with a credit card. Unfortunately, paying with a credit card will always cost more because of added interest and fees applied to the balance of the account. As time goes by, these charges can add up, resulting in a significant addition to the original cost of the items purchased. You should try to pay for purchases with cash or a debit card to avoid having to pay more than the item is worth to own it.
Rewards Credit Cards Are Always Beneficial
During the early 2000’s, many credit card companies offered free items, cash back, or rewards points for using your credit card at specific merchants or for buying items that fit into a particular category. Today, the rewards are more difficult to earn and you must spend more than you may be comfortable with to get the rewards that you want. Instead of choosing a credit card based on the rewards, you should choose the one that offers the highest credit limit with the lowest interest rate that can be used at any retailers you desire.
You Will Be Fine Paying Only The Minimum
Some people just pay the minimum payment amount indicated in their credit card statement because it is all that’s required to keep their account in good standing. Unfortunately, if you just make the minimum payment, it can take more than 10 years to pay off the entire balance plus all associated interest charges. It is better to keep the balances of your credit cards as low as possible by paying off as much of the balance as you can every month.