7 Untold Myths about Credit Cards That You Should Know About ...

Although credit cards have been used since the 1960s, there are still a number of baffling myths circulating about them. You probably heard a few of them yourself, and possibly even believed some of them simply because they sounded logical. However, failing to fully understand credit cards and how credit scores are calculated can only hurt you in the end.

The following seven credit card myths are still prevalent today, so it is important to be aware of them and, of course, the truth behind the myth.

1. Checking your own credit score will affect it negatively

This is one of the most common and possibly also most dangerous myth about credit cards. Many people never check their credit score for fear that it will affect it negatively, which means they don?t know where they stand. The truth is that checking your own credit score has no impact on your credit score whatsoever.

2. ?No Limit? credit cards allow you to spend as much as you like

This is another risky myth to believe, because even though some credit cards don?t set a limit each month, there is always an end to the amount of credit you can get and if you aren?t careful you will eventually be cut off.

3. Not signing your credit card will prevent thieves from using it

This myth says that if you simply write ?See ID? in the signature field of your credit card it will prevent thieves from using your card. Unfortunately, without your signature your card is not valid, even for you.

4. If you pay off your debt you will boost your credit score immediately

This would be nice, but in reality, your credit score doesn?t improve the minute you pay off your debts. It takes around 30 to 90 days, for your credit score will begin to show improvement, providing you haven?t racked up new debt within that timeframe.

5. If you go over your limit but pay it back before the deadline you?ll never have penalty rates

A credit card company won?t necessarily decline you a purchase if it pushes you over your credit limit, but that doesn?t mean that it won?t have repercussions. Every time you go over your credit limit, you risk having your interest rates increased to penalty rates, even if you pay it back right away.

6. The way you use your debit card can affect your credit score positively

While using your debit card wisely may be an indication that you are a responsible individual and know how to handle your finances, it isn?t taken into account when your credit scores are calculated.

7. You can improve your credit score if you pay more than you owe

This might seem logical, but it isn?t true. Credit bureau experts have explained that even if you are below zero on your account, it is assumed that the situation is temporary. So it doesn?t matter if you have 100 dollars or 1000 dollars on your account, for scoring purposes, it will still be shown as a zero.About the author : Ally is part of the team that manages Budgeting Spreadsheet and How to Save Money, which are both personal finance-related sites based in Sydney, Australia. Before joining BS & HSTM, she was a Media Planner in McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi?s 501 ?Live Unbuttoned? global campaign.

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