The credit cards subject is surrounded by myths that may keep you from reaping their maximum benefits. On the other hand, not familiarizing yourself with certain credit card facts may land you into credit troubles that might not be so easy to come out of. With this in mind, we have debunked a few of these myths and asserted some important facts to help you properly manage your credit.

• Myth: Credit Cards Should Only Be Used For Emergencies

Credits cards come in handy during emergencies. However, they are not reserved to be used for such times only. According to experts, using these cards for most of your daily spending is a very smart financial move; they help you track your expenses and account for your monthly expenditure, something which is harder when dealing with cash.

Credit cards offer price protection. If for example, you buy an item for a specific price say $70, then it drops to $50 between typically 60 -90 days, you are entitled to be refunded the difference.

It gets even better; regular use of credit cards attracts the benefits of reward programs. For regular purchases, you accrue cash back incentives and other reward programs.

Having debunked the myths, is it true that regular use of your credit card can improve your credit score? Yes, this is because it shows and establishes that you can do on-time payments, consequently increasing your creditworthiness.

• Fact: Less Than Minimum Payments on Your Credit Card Are Considered As Missed Payments

Indeed, failing to meet your total minimum credit card payment will be reported as a missed payment by your credit card company. If you can’t afford to pay your credit balance in full, make sure you at least make your minimum payments before the due date to protect your credit score.

That’s not all; it is very advisable to pay more than just the minimum payments. This helps you reduce your debts and helps you to escape the interests accrued from the remaining balances. These interests are some of the ways credit card companies earn their money.

• Myth: Getting a Credit Card Can Hurt Your Credit Score.

This is a big credit card myth, getting a credit card doesn’t lower or worsen your amazing credit score. In sharp contrast, getting one is a step towards building your credit score especially if you have good spending and payment habits. If your credit card is well managed, getting loans becomes easier as your credit score keeps rising. As a matter of fact, a credit utilization ratio of below 30 percent works favorably for your Credit Score.

So, when can having a credit card affect your credit score? It happens when you rake up huge unpaid bills each month and fail to pay them on time. To avoid this, get a card with low top limits. It will greatly help you to keep your spending in check.

• Fact: High Credit Card Limits Are Very Good

Many people are put off getting a credit card with higher limits as they seem risky. However, higher credit card limits can be advantageous as long as you manage it wisely. Just make sure you keep your balances very low in order not to lower your credit score.

30% of your credit score is calculated from your debt-to-credit ratio. This is the ratio of your debt proportioned to your total credit limit. So the only way that a higher credit limit can affect your credit score negatively is if your debt-to-credit ratio is high. Given the above points,  you should embrace the idea of getting a credit card with higher limits. 

• Myth: Old Credit Cards Hurt Your Credit Score.

It is a general misconception among many that old Credit Cards hurt your Credit Score. What happens is exactly the opposite, old cards improve your score, but only if they don’t have unpaid outstanding balances.

So, if your old credit cards have healthy financial statistics, it is advisable not to close them; they add more value to your credit history. Credit History is one factor that is examined when you apply for loans in financial institutions.

Old credit card accounts are great sources of reliable statistical evidence accrued over time that prove you have good money management skills.

The Take-Away

With the above-debunked myths and vindicated facts about credit cards, managing your credit should be easier. Don’t be discouraged by a few financial horror stories if you want to start using credit cards. One important truth to hold onto is that credit cards are as good as the spending and payment habits of the person who uses them.