Credit card myths have been lingering in the social consciousness for decades. The internet has helped keep many of them alive. What’s the best way to deal with credit card misinformation, inaccuracies, falsehoods, and downright lies? The answer is to meet them head-on with cold, hard facts. Information is power, especially in an age when there’s so much misinformation floating around.
While the mainstream media and online social gathering places love to talk trash about plastic credit cards, it’s best to learn the truth before applying for a new card, upgrading the ones you already have, or cutting down on the use of credit altogether. There’s no one-size-fits-all solution for consumers, but it helps to have reliable information on your side. Consider the following myths about credit cards, along with the facts about each one.
Plastic is Inherently Evil: Always Use Cash
It’s how people use credit cards that is the real problem, not the instruments themselves. In the same way that people misconstrue the Biblical admonition about money being the root of all evil, they do the same with credit cards. It’s the love of money that is said to be the root of evil, not money, per se. There are cash advocates among the modern prepper community.
They think cash is kind and plastic are awful. The truth is more mundane and sensible. Most adults have one or more credit cards in their wallets, and the few who don’t use them rarely rely on cash exclusively. The bottom line is responsible use of credit is a normal part of modern life. When used properly, as a plan to stay on top of your finances, plastic offers everyday convenience and a way to gain access to funds in emergency situations.
College Students Can’t Get Credit Cards
Students have plenty of options for getting credit cards. The trick is choosing the one that suits personal spending habits and preferences. The best time in life to start shopping for credit cards is during college.
But it’s imperative for young adults to gather all the essential facts before applying for a particular card. The smartest first step is to review a special guide, just for students, that explains how to find the most suitable credit card. If you already know how to budget your own funds and manage everyday finances, get relevant information from the guide, and get the card you need to establish a financial history as a responsible adult.
Card Issuers Report to All Three Bureaus
Some report to none, one, two, or all three. You never know unless you ask and read the fine print of contracts. For some reason, there’s an assumption by the media and many consumers that every credit card issuer reports to all three bureaus. Most top-rated cards issued by major banks do report to Experian, TransUnion, and Equifax. However, you’ll have to read the contracts to know for sure. As the landscape of the financial credit reporting industry continues to change, institutions are trying to come up with their own scoring systems.
Wealthy People Use Cash, Not Credit
Few successful people in the modern era use cash for major or even minor purchases. Most adults have and use credit cards on a regular basis. Using cash is not a sign of wealth or genius. Everyone has a unique financial situation. It’s safe to say that most working adults use both. Beware of myths about what wealthy people do because it’s no indication that those become wealthy that way.
Secured Cards are Little Better Than Savings Accounts
A secured card can do a lot, including helping users improve their credit scores, learn to use plastic responsibly, and establish a financial history. Secured credit cards can help build a financial history and become creditworthy. Users must deposit a fixed amount of money into an account before getting access to a plastic card with a spending limit that equals the deposit amount. Some secured issuers report to all three bureaus and can improve scores for cardholders by a substantial amount within a few months.
Interest Rates on Plastic Will Eat You Alive
If you know how to shop for the right product, there’s no reason to pay a high interest rate. It’s easy to miss the point about interest. Many credit cards have average rates, high annual fees, and late payment penalties. Others have low introductory rates that go way up after the initial period elapses. However, most issuers offer reasonable rates for consumers. Paying all balances in full on or before the due date eliminates the need for paying any interest.