First it was Bigfoot, then came the Lochness Monster, and now, we’re debunking the myths around credit cards.
We grow up hearing about credit cards as things that belong to the world of grown ups, then when it comes time to sign up for one ourselves, there can be a lot of miscommunication and misunderstandings.
Check out these three credit card myths, and our reasons behind debunking them!
Owning a credit card will hurt my credit rating
A credit rating is a way to judge how likely you are to meet your financial commitments, based on prior experiences. It is based on any major loans or spends you’ve been involved with in the past. Think of it this way – it’s how attractive you are, just in a financial sense.
Contrary to what many believe, owning a credit card can slide you up the attractiveness scale – at least, as far as your credit rating is concerned. That doesn’t mean you have to have debt to get a good score, it simply means that if you show you can borrow money and pay it back on time, you will be judged as able to deal with credit and not default. You don’t even need to wait until your credit accrues interest to make the most of this perk.
You will always have credit card debt
Banks are evil, they say. Banks are out to get you, they say.
Banks are businesses – but you can take charge. Make sure that you have a credit card that suits your needs. If you just want a credit card as a plan B, then perhaps a credit card without an annual fee could be for you. If you think you’ll be using your card a lot and may not be able to pay off your balance in full every month then a low rate card without all the bells and whistles may suit you best. Whatever the case, look at for a credit card with interest-free days and try to repay your balance in full every month to avoid being charged interest.
If you are interested in a low rate card, take a moment to review the Virgin Money Low Rate Credit Card to see if it is right for you.
If you are interested in a card with no annual fees, take a moment to review the Virgin Money No Annual Fee Credit Card to see if it is right for you.
Credit limit = Credit budget
When you get a credit card you will have an approved limit attached to it. For some people, a $10,000 limit will mean they automatically spend $10,000.
While you will have an approved limit based on your financial circumstances, you may not need the entire amount. Remember that if you use it, you will still have to pay the balance back at some point, so it’s better to ask yourself if you really need the whole lot, or if you can still buy all your favourite goodies without hitting that ceiling. You can even ask to reduce your credit limit if you would like to remove the temptation!
If you are interested in a new credit card, review the credit cards available at Virgin Money.
Have you heard any other credit card myths?