11/30/2022
Getting that credit card that everyone is talking about or that you've wanted so much can be an important help or an added complication for your personal finances. For it to give you the benefits you expect, you must know how to use it and have accurate information on hand.
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Before comparing to find the most suitable one, it is necessary to clarify some of its common myths and misconceptions. We cannot exaggerate by saying that there are many, but it is clear that there are a few that tend to confuse people.
Credit cards enjoy an undeserved bad reputation because it is one of the most common indebtedness among Americans. At this point we can only conclude one thing, it's all about knowing how to use them wisely.
Apart from that, people get carried away by myths such as:
Myth 1. If you have a bad score or no credit history, you can't get one.
These requirements are important for many things, but they are not a real impediment to obtaining one of these products.
Options abound, so you can choose a secured credit card when your score is not the best, like the Bankamericard Secured or the Citi Secured card, or products like the Petal Visa. If you are a college student, there are many alternatives for users without credit history.
Myth 2. Free credit cards offer more value.
This statement depends on the comparison between similar products. As a general rule, credit cards with annuities tend to give you more benefits than those that are free of charge.
When using these financial instruments with annual fees, you are likely to get much more value than what you are paying.
Myth 3. Applying for many loans at the same time increases the probability of approval.
In fact, the opposite applies here: applying less often gives you a better chance of getting a credit card. The recommendation in this regard is to make an application every 3-6 months for a fundamental reason: every time you do so, you are subjected to a hard inquiry, which lowers your score.
When you make too many requests in a short period of time, banks view you with suspicion and you unnecessarily lower your score.
Myth 4. The time limit for spending the welcome bonus begins when you activate the card.
This statement can be considered misinformation. Welcome bonuses often require you to spend a certain amount of money within a set period of time.
For some reason, people think that the clock to get the reward starts ticking when you activate the card. But it's not that simple, it actually starts when you get approved. If you want your miles or points, keep this in mind!
Myth 5. You should cancel credit cards you don't use.
This applies if you have too many cards that could be canceled for lack of use or have no real utility. Otherwise, it is not recommended because of how it can end up affecting your score. When you cancel a credit card, you decrease the amount of credit available and increase your credit utilization rate.
In addition, it can shorten your credit history and reduce your credit mix, which benefits from having several instruments. If you are being charged an annuity, it is preferable to request a downgrade so that it does not affect your score.
Myth 6. You have to carry a balance from one month to the next to improve your score.
Within the logic of responsibility, this argument does not work. In fact, it works the other way around: paying your balance on time should improve your credit score.
Even if you can't always pay everything you owe, at least pay a large portion of it. When you carry over balances, things cost you more and you don't reap the rewards.
Myth 7. Checking your credit score lowers your credit score.
Unlike a hard inquiry, when you personally check your credit score it is considered a soft inquiry.
This action does not negatively affect your score nor does it appear on your credit history. It is very important to do this review periodically to see how you have progressed and to report any errors in your file.
Myth 8. Credit cards make you a shopaholic.
This depends entirely on how you manage your personal finances. Some people think they'll have more money to spend and others know it's a tool they should use wisely to get the benefits it offers.
Myth 9. The best credit cards are the ones that give the most rewards.
This is not always true. A 0% APR may be very tempting at first, but when the grace period is over, it's something else. The same goes for the intro bonus, which offers you an amount of points or miles under certain conditions.
When comparing, look for advantages such as: insurance, cash back, points programs, extended warranty, travel protections and more.
They say that you should not believe everything you read or hear in the media. In money matters, it is essential to have clarity and reliable sources of information, such as Busconomico's search engine/comparator.
Español: Mitos sobre las tarjetas de crédito