4 Common Credit Card Misconceptions You Should Avoid

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Credit cards have become increasingly popular; however, because of their popularity, there are a number of rumours and myths floating around about what you should and should not do.

With the holiday season just around the corner, spending money is often more of a need than a want. But first, get your facts right before you start swiping your card for all your purchases.

It's time to debunk these common credit card myths. Some may be true, but these four are certainly not.

1. As long as you make a payment by the due date, you’re not considered to have missed a payment

Of course, making a small payment at the end of each period is always better than not making a payment at all. However, if you do not pay at least the minimum amount due on your credit card bill, your bank will still consider it a missed payment.

The result is higher interest charges, a late payment fee and penalty, and a negative impact on your credit profile!

2. You must carry a balance to build your credit history

This is false. To start building your credit history, all you have to do is start using your credit card. Having an outstanding balance does not help in building your credit score; instead, it will only result in more interest payments!

The best way is to still pay your bills in full on time and stay within your credit limit.

3. Having a high credit limit is bad

This is only true if you are using your card without carefully monitoring your spending. If you are cautious about how you use your card, having a high credit limit might not be a bad thing at all, as it gives you more flexibility.

Additionally, having a high credit limit with a low outstanding balance can contribute to your overall credit score.

4. The more cards you have, the better

While having many cards increases your available credit, your credit score will likely be affected. Banks are generally quite nervous about people with too many cards. Also, the more cards you have, the tendency of you overspending is higher!

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