4 Common Credit Card Misconceptions
Credit cards have become increasingly popular, however, because of its popularity, there are a number of rumours and myths floating around about what you should and should not do.
Some may be true, but these four are certainly not.
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 as a missed payment. The result – higher interest charges, late payment fee and penalty, and a negative impact on your credit profile!
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 payment! The best way is still to pay your bills in full on time and stay well within your credit limit.
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 in 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.
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!