There is no denying that credit cards are among the most popular payment methods. However, what is surprising is that, despite being immensely popular, credit cards remain a mystery to so many people. For example, an American survey showed that nearly half of credit card users have never reviewed their terms and conditions.
While that is bizarre, it doesn’t compare to what the survey uncovered next. Over 1/3 of credit card users do not know how a credit score is calculated. In other words, they don’t understand how a credit card works. In other words, it isn’t all that surprising that many still believe some strange myths about credit cards.
Credit Cards Are Unsafe
A typical belief is that, while credit cards offer a degree of protection for land-based purchases, online shopping is unsafe with credit cards. However, this is not true. Credit card companies implement fraud protection protocols, employing multi-factor authentication to ensure your data remains private. On top of that, you can dispute any troublesome purchases, so you will likely be safer using a credit card than any other tool.
Because of this, credit cards have become one of the most popular tools for online transactions. Credit cards are among the best options for shopping, gambling, or transferring money. Of course, they are a standard method at online casinos. If you want to check out the top credit card online casinos, you will find that the websites offer excellent service, a wide library of fantastic games, and much more.
Paying the Minimum Balance
It is a common belief that you should pay the minimum balance monthly to save some cash. Many credit card users believe this is the case and recommend others do the same. However, is paying the minimum balance monthly an intelligent move?
Considering the short run, this strategy may not be too bad. However, you should avoid paying the minimum balance in the long run. Credit cards have a steep interest rate. This means the longer you put off paying, the higher the amount you will have to pay. It is best to rip the band-aid early and get the payment over with.
Credit Scores Depend on Your Balance
Payment history is an important factor that goes into calculating your payment score. However, it makes up 35% of your overall score. Credit utilization makes up 30%, which compares your debt to your credit limit.
Many financial planners say you don’t need to pay off your balance to have a good credit score. All you need to do is pay a portion on time. Some suggest paying the minimum balance. However, as we said before, that could present a problem in the long run.
Using Your Card Monthly is Necessary
It is commonly believed that you must use your credit card monthly to maintain a good credit score. And while it does help to use the card frequently, it is not mandatory. Most businesses will accept credit card-based payments, no matter how long you’ve been away.
Leaving your card alone for longer than a month is not a great idea. Your account might be closed down by an official due to inactivity. If that happens, it will impact your credit score and give you some trouble in the future.
FAQ
What is the Number 1 Rule of using Credit Cards?
The most important thing to remember is that you should always pay your bill on time.
What is the biggest con of using credit cards?
The most significant disadvantage of using credit cards is likely the high-interest charges.
What are some common mistakes to avoid when using credit cards?
There are a few things you should avoid. For example, taking cash advances, carrying a balance, and using all your credit limits are best avoided.
Are credit cards free money?
No. And this belief leads many to make big mistakes. Credit cards are based on a simple premise: “Buy now, pay later.” So, you are borrowing money, which is growing with interest.
Final Thoughts
Credit cards are the most popular payment method in the United States. And yet, there is a plethora of people who use these cards but don’t quite understand how they work. We hope this article has helped to enlighten you regarding credit cards. Hopefully, you will bear some of these myths in mind the next time you make a payment.
