We have unicorns in our office as therapy pets: Myth (unfortunately)

Follow that rainbow; there’s gold at the end: Myth (again, unfortunate)

You should carry a balance on your credit card, it increases your credit score: Myth

Some myths are harder to tell from the truth than others. While you may not believe in Bigfoot, you may be falling for some other myths that could be costing you a lot more than a hairy giant in the woods.

Credit card myths are not only incredibly common, but incredibly expensive mistakes to make. That’s why we wanted to help debunk credit card myths once and for all.

MYTH #1: Don’t get a credit card, just use debit

FACT: Our experts agree that the longer you have a credit file, the better your score and more easily you can get credit when you need it. That being said, the simple rule is this: get a card and pay it off on time each month. It is important to make payments on time, so setting up automatic payments can help to keep your credit score high.

A little expert advice:

There are a few advantages of using a credit card to pay for your everyday purchases:

• Accumulate rewards on your purchases to redeem for cash, merchandise, travel or other fun ways to “treat yo self”
• Additional travel and purchase benefits (like rental car insurance)
• Credit cards are widely accepted, especially for online purchases or traveling abroad
• Included fraud protection means that you’re not held responsible if someone steals and uses your card

Set up your credit card with online or mobile banking and pay off large purchases right after you make them, so your credit card balance doesn’t snowball into debt you can’t pay off.

MYTH #2: Carry a balance on your card; it helps increase your credit score

FACT: Please, don’t! Just don’t. This is one of the most costly myths to believe. Only carry a balance if you need to—always pay at least the minimum and preferably the whole balance as soon as possible. A balance over 65% of the limit will reduce your score, so if you do keep a balance, keep it low.

A little expert advice:

While carrying a balance doesn’t specifically impact your credit score, it can mean expensive interest payments. If you’re unable to pay off your balance within a couple of months, one of our experts would love to talk with you about options to save interest with another loan option, like a line of credit. Find a branch near you and drop by to talk to a real human who really cares. Because, we get it, sometimes it’s impossible to pay off that full balance, but it’s crucial to make the minimum payment.

Make sure you choose the right credit card for you. Rewards-based credit cards may sound great, but carrying a balance might be costing more than those rewards are worth. If you typically carry a balance, do the math to see if a low interest card might save you more than what you earn on your rewards.

MYTH #3: Only have one credit card

FACT: It’s ok to have more than one card, our experts say—it’s the balance to limit ratio that can affect your score.

A little expert advice:

While the number of credit cards you have doesn’t specifically impact your credit score, making payments on time definitely will, as well as the number of inquiries to obtain additional cards in a short time frame. Having a ton of cards can be overwhelming, so many people find it easier to manage and organize payments for fewer cards.

Make sure you keep track of your spending and payments so your debt doesn’t get out of control. Using a budgeting app, or your online banking, can help you manage your transactions and see what you’re spending in seconds.

MYTH #4: Opening a credit card will hurt my credit score

FACT: Opening a credit card will start your credit file and get you set up for credit needs in future. The key is not to apply for every credit card offer—those inquiries stay on your credit file and affect your score.

A little expert advice:

But don’t worry—a single credit card application doesn’t have a major impact on your credit card score. You may notice a small dip at the beginning but your score will get back up again if you make payments on time.

If you’re new to credit, it’s a good idea to start your file by opening a credit card. If you’ve been struggling to get approval, submitting several applications in a short time can hurt your score. Instead, try starting with a secured credit card to build your credit rating.

MYTH #5: Don’t accept a credit limit increase

FACT: Credit limit increases are totally fine if you use the same share of your balance as before—then it won't affect your score. It’s pretty handy to get a manageable increase in credit when it’s offered, you never know when you might need it!

A little expert advice:

Increasing your credit limit alone doesn’t negatively impact your credit score. If you find that your credit limit is too small to fit your needs, but you’re paying off your balance regularly, it could be worth it to ask for an increase. Remember, your “needs” don’t include things you can’t afford. Buying that new motorcycle or designer handbag could cause you to rack up costly interest charges.

Still have more questions about credit cards? Want to convince us Bigfoot exists?

We’re here to listen. Give us a call anytime at 1-800-332-8383.