Debunking Common Credit Card Myths that Can Get You Into Debt
Unlike debit cards, which automatically deduct the purchase from your checking account, credit cards allow you to borrow money against a credit card provider with the intent of paying them back at a later date. Some individuals are able to effectively utilize their credit cards to increase their credit scores, while others find themselves under a mountain of debt due to irresponsible purchases and compounded interest fees.
Myth: Using Your Credit Card Often Boosts Your Credit Score
- One of the biggest myths regarding credit cards is that using them frequently will help boost your credit rating. This is only true if you are able to pay off your credit card bill each month, as this is what determines how reliable of a borrower you are and thus your credit score.
Myth: You Only Have to Pay Off the Minimum Balance
- Many individuals believe that they will not have to pay interest if they pay the minimum balance on their credit card each month; in reality, this is how most credit card companies make their money. Each time you pay the minimum balance on your credit card , a new interest rate charge is added onto your remaining balance until an endless cycle of debt is created. For this reason, it is important to pay off your credit card in full each month.
Myth: Some Cards Have No Credit Limit
- All credit cards have a credit limit, even if they are not advertised. In fact, many exclusive credit cards do not disclose their spending limits so that card-holders believe they can spend away without any repercussions. Unfortunately, once you have maxed out your card, you will be facing high fees and a significantly lower credit score.
You don’t have to obtain a credit card from a bank in order to build credit. Learn more about the credit cards, checking accounts , and debit cards available from GCS Credit Union in O’Fallon, IL by calling (618) 797-7993 today! We also offer auto loans.