10 credit card myths debunked
10 credit card myths debunked

10 credit card myths debunked

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There’s a lot of misinformation out there. We help you find the truth.

Financial help is everywhere. Whether it’s from a family member or a random person on an Internet forum, you can find endless advice on what you should do with your money.

Unfortunately, a lot of it is flat-out wrong.

Credit cards in particular attract a lot of home-baked advice, as they’re easily accessible. If you’ve received a few tips recently, do your research: The truth may be different than you expect.

Here are 10 myths that are especially prevalent in the industry — and why they’re simply not true.

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Myth #1: You must pay an annual fee to get a credit card.

One reason many people stay away from credit cards is because they’re worried about paying an annual fee. That’s too bad, because you can find many credit cards with no annual fees. Several of them offer great perks rivaling those of annual-fee cards.

Look at the Bank of America® Travel Rewards credit card, for example, which offers 1.5 points per dollar you spend on all purchases. It’s one of the best travel cards on the market, and it’ll cost you nothing.

If you’re looking for great cash back, check out the Citi Citi® Double Cash Card. It offers 1% cash back on everything you buy and another 1% as you pay for your purchases. Like the Bank of America® Travel Rewards credit card, getting it will set you back exactly $0.

Even if your credit card does have an annual fee, your credit card company might waive it if you ask. Call your provider when you see the charge on your monthly credit card statement and ask them to remove the fee. Some providers want to make sure you’re happy and won’t switch to another card, so customer support could waive this fee if you ask or threaten to cancel. Not every company will do this, but it could be worth a shot.

Myth #2: It’s never a good idea to get a secured or store card.

Secured and store cards get a bad rap because they’re different from “standard” — or unsecured — credit cards.

To get a secured credit card, you must put down a security deposit. This serves as collateral in case you fall behind on your payments. And typically, a store card can only be used with the company that issues it. For example, you can only use the Target REDcard™ Credit Card for Target purchases.

So a secured card forces you to lock up a chunk of money right away. And a store card lets you shop only at a certain store. Why get either of them?

Here’s a big reason:

Because they can help you build credit. To get an unsecured card, you typically must have at least a good credit score. On the flipside, issuers of secured and store cards are more willing to take on customers with less-than-perfect credit.

Once you get a store or secured card, you can slowly build your credit by making payments on time. Once you’ve increased your credit score, apply for an unsecured card.

Compare secured credit cards

Updated July 22nd, 2018
Name Product APR (Annual Percentage Rate) for Purchases Welcome Bonus Interest Free Period
9.99% fixed
Up to 25 days
Low fixed interest rates with no penalty rate.
10.24% variable
Up to 25 days
18.89% variable
Up to 25 days
A secured Visa® credit card that helps you build your credit quickly.
9.99% fixed
Up to days
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.
20.24% variable
Up to 25 days
17.99% fixed
Up to 25 days
Borrow up to $10,000 and get your credit score back on track.
14.24% variable
Up to 25 days
First Latitude Platinum MasterCard® Secured Credit Card
First Latitude Platinum MasterCard® Secured Credit Card
26.24% variable
Up to 25 days
13.74% variable
Up to 21 days
Created to help you establish or rebuild credit.
17.99% variable
Up to 24 days
Earn SKYPASS miles while building your credit history in the United States.

Compare up to 4 providers

Myth #3: I got a credit card when I was 17, so my teen can too.

That’s not entirely inaccurate, but it’s not the whole truth. By current credit card laws, the minimum age to get a credit card without help is 18. Even then, those under 21 must prove their ability to pay their card bill independently.

It’s still possible for underage teens to get a credit card, but not on their own. The only way is for you to add them to your account as an authorized user.

For more help, check out our “under 21” guide to credit cards.

Myth #4: Forget about American Express — you can’t use it anywhere.

Back in the day, you might have seen plenty of signs that read, “Sorry, we don’t accept American Express.” There’s a long story for why that was the case, but it essentially boils down to American Express charging retailers high fees.

Though it’s true that fewer retailers accept American Express than Visa or Mastercard — the most widely accepted networks in the world — American Express has been gaining ground. Nowadays, if a retailer accepts Visa or Mastercard, they’ll probably accept American Express as well.

That said, Visa and Mastercard are still the most accepted networks by far. Keep one on hand just in case your American Express isn’t accepted.

Myth #5: You should carry a balance on your card and only pay the minimum.

Many people give this advice claiming it’ll help your credit. In reality, carrying a balance doesn’t help your credit score. Not paying your balance in full actually lowers your score because it increases your credit utilization ratio.

One argument for keeping a balance on your card is to show lenders you’re using your credit. You should certainly keep your credit card active, but that doesn’t mean you have to maintain a balance. Just use your credit card at least every one to three months.

If you keep a balance on your credit card, it’s usually a bad idea to make only the minimum payment each month. This puts you in danger of ballooning interest payments. Find out how credit card interest works here.

Overall, it’s best to keep your balances low relative to your total credit. Most experts recommend you keep your credit utilization ratio under 30%. And if you can pay your balance in full each month, even better.

Myth #6: Never use your credit card online.

You may think using your credit card online isn’t safe because your information could be stolen. The truth is, it can be very safe to shop online with a card as long as you follow a few precautions.

In fact, it’s better to use your credit card than your debit card for online shopping. If there are fraudulent purchases on your credit card, you can easily reverse them by contacting your card issuer. It’s more difficult to do so with a debit card.

When you shop online, look at your browser’s address bar and check for the “https://” at the beginning of the web address. This means the website encrypts your information — an important feature when you’re sending financial data.

Additionally, shop only on your personal computer on a private Internet connection. You have no idea who might access your information on a public computer, and hackers can intercept your data on a public Wi-Fi connection.

If you have a Visa card, its free program, Verified By Visa (VBV), adds another layer of protection when you shop online. It uses passwords to prove your identity every time you use your card online.
How credit card security works

Myth #7: Don’t sign the back of your credit card.

Some people will tell you to avoid signing the back of your credit card. They might tell you to write “See ID” in the place where your signature should be.

The idea is if a thief steals your card and uses it at a cash register, the merchant will ask for their ID. Seeing that the thief doesn’t have a matching ID, the merchant will refuse to process the transaction.

That sounds great in theory, but oftentimes merchants don’t look at the backs of cards. Furthermore, low-dollar transactions may not require a signature at all.

Your best bet is to sign your card. Signing the back of your card keeps a thief from signing their own name in a blank signature box. And technically, your signature is what seals your contract with your credit card company, giving you the right to use the card and qualifying you for certain consumer protections.

Myth #8: You can build a perfect credit score very quickly.

Getting a credit card isn’t a magic elixir for your credit score. It’s highly unlikely your score will shoot up 100 points just because you were approved for a card.

Yes, it’s true that a credit card can help you build credit. But this takes time — usually a long time. You build credit by making on-time payments consistently.

You might hear stories from people who get a great credit score in as little as a month. But their experience isn’t necessarily going to be yours, and there’s no hack or quick fix.

The perfect credit score is 850, and it’s not easy to achieve. You must have been working with credit for many years through credit cards, loans and other forms of credit, have no late payments and carry almost a zero balance on your cards.
What’s a good credit score?

The implication is clear: If you have an 850 score, you’ve been responsible with credit for a very long time.

Myth #9: You’ll always have the same APR from when you signed up for your card.

You may be excited to see your initial APR when you get your card. But be careful: It might not last forever.

Many people forget about the introductory APR, which is a special interest rate you get when you sign up for a card. If a card offers “0% APR on purchases for 12 months,” you won’t pay interest for a year. But if you still carry a balance after that time, you’ll start paying interest.
What is intro APR?

Beyond intro APRs, card issuers have other ways to change your interest rate. Here are the ways they can do so:

  • You’re late on your payments. If you’re delinquent on your bill, your issuer may assess a penalty APR — typically around 30%. This interest rate could apply to your existing and new balances.
  • Your APR is pegged to the prime rate. Your issuer will probably give you a variable interest rate that changes based on the prime rate. This is the interest rate banks give to their largest, most creditworthy clients. Unfortunately, this is pretty much out of your hands.
  • The issuer deems you a higher-risk member. From time to time, your issuer assesses your risk profile. If it sees red flags — such as a big drop in your credit score — it may raise your APR. Before it does, however, it must notify you at least 45 days in advance.
  • You’ve been a cardholder for at least 12 months and your issuer wants to raise your rates. As long as your issuer gives you at least 45 days’ notice, it can change your APR.

The Credit CARD Act of 2009 introduced many changes that protected consumers in the credit card industry. One of them is the requirement of a 45-day advance notice for most APR changes.
The Credit CARD Act of 2009

Myth #10: You can exceed your credit limit as long as you pay your balance before your due date.

Ditch this advice fast. Though your card issuer may not decline a purchase that puts you above your credit limit, that doesn’t mean you should make it.

Earlier, we talked about how your issuer can assess a penalty APR if you pay late. It can do the same thing if you exceed your credit limit. Furthermore, it may assess an overlimit fee, which will typically set you back $25 to $40.

Lastly, going over your credit limit could negatively impact your credit score. It’s never good when you exceed 100% credit utilization on one card.

Compare credit cards

Updated July 22nd, 2018
Name Product APR for Purchases (Purchase Rate) Intro APR for Balance Transfer Annual Fee
14.74%, 18.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 18.74% or 24.74% variable)
$0
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees
12.74%, 16.74% or 20.74% variable
0% for the first 18 months from account opening (then 12.74%, 16.74% or 20.74% variable)
$0
An 18-month 0% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$495
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$195
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
16.74% variable
0% for the first 15 billing cycles (then 16.74% variable)
$995
Earn points every time you spend. Luxury Card enhances your purchasing power by providing you with one (1) point for every one dollar ($1) you spend. Every purchase gets you closer to the rewards you want.
24.74% variable
$39
Designed to help build credit history with no deposit required and access to benefits.
23.9% variable
$75 annual fee for the first year ($99 thereafter)
With this card you get a 23.9% Variable APR.
17.49% to 25.49% variable
Up to $75 annual fee for the first year (up to $99 thereafter)
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
14.74% to 25.74% variable
0% for the first 15 months (then 14.74% to 25.74% variable)
$0
Earn 25,000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
14.99% to 24.99% variable
0% for the first 12 statement closing dates (then 14.99% to 24.99% variable)
$0
Earn more cash back for the things you buy most.
14.74% to 25.74% variable
0% for the first 15 months (then 14.74% to 25.74% variable)
$0
Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $150 back in the form of a statement credit.
17.74% to 24.74% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50,000 points when you spend $4,000 on purchases within the first 3 months of your account opening, and an additional 30,000 points when you spend a total of $30,000 on purchases within the first year of your account opening.
17.74% to 24.74% variable
$450
Earn 50,000 BONUS POINTS after spending $4,000 on purchases in the first 3 months from account opening* — that's $750 toward travel when you redeem through Chase Ultimate Rewards®.
14.74% to 24.74% variable
0% for the first 12 months (then 14.74% to 24.74% variable)
$95
Earn 15,000 Membership Rewards Points after you use your new Card to make $1,000 in purchases in your first 3 months.
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Earn unlimited 1.5% cash back on every purchase - it's automatic. No minimum to redeem for cash back.
17.74% to 24.74% variable
$95
Earn unlimited 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
14.74%, 20.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 20.74% or 24.74% variable)
$0
Earn unlimited 1.5% cash back on every purchase, every day
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Earn 5 cash back on up to $500 in combined purchases in bonus categories each quarter you activate and unlimited 1 cash back on all other purchases.
16.74% to 24.74% variable
$0
20,000 online bonus points offer. Ditch the restrictions of typical airline rewards cards. Any airline, any hotel, anytime. No blackout dates.
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
$0
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
14.74%, 21.24% or 24.74% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50,000 bonus miles once after spending $3,000 on purchases within the first 3 months from account opening.

Compare up to 4 providers

Updated July 22nd, 2018
Name Product APR (Annual Percentage Rate) for Purchases Welcome Bonus Interest Free Period
9.99% fixed
Up to 25 days
Low fixed interest rates with no penalty rate.
10.24% variable
Up to 25 days
18.89% variable
Up to 25 days
A secured Visa® credit card that helps you build your credit quickly.
9.99% fixed
Up to days
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.
20.24% variable
Up to 25 days
17.99% fixed
Up to 25 days
Borrow up to $10,000 and get your credit score back on track.
14.24% variable
Up to 25 days
First Latitude Platinum MasterCard® Secured Credit Card
First Latitude Platinum MasterCard® Secured Credit Card
26.24% variable
Up to 25 days
13.74% variable
Up to 21 days
Created to help you establish or rebuild credit.
17.99% variable
Up to 24 days
Earn SKYPASS miles while building your credit history in the United States.

Compare up to 4 providers

Updated July 22nd, 2018
Name Product APR (Annual Percentage Rate) for Purchases Annual Fee
24.4% fixed
$0
A no annual fee credit card and discounts when you shop at Target.
29.99% fixed
$0
The Fingerhut Credit Account is store-specific, and used to finance purchases made from Fingerhut.com or Fingerhut FreshStart's catalogue.
29.99% fixed
$0
Helps you keep building your credit as you buy great name brand products.
29.99% fixed
$0
Get instant access to purchase items in the Fingerhut store with no overlimit fees.
$0
Get a $500 credit limit to make purchases on the Horizon Outlet website.
$0
Looking for the best card? You can have it while you build your credit with Horizon Card Services. Get an unsecured line of credit and the best customer service!
$0
Shop the items you need at myuniqueoutlet.com with up to a $1,000 credit.
$0
Get a $300 to $5,000 instantly to shop 100,000+ items at Emporium.
24.4% variable
$0
28.49% variable
$0
6, 12, 18, and 24-month financing options available and special promotions just for cardmembers.

Compare up to 4 providers

Bottom line

Before following any credit advice, do your research and find out if it’s too good to be true.

Try to stay within your credit limit and watch out for fees, card theft, APR changes and other slowdowns on your way to excellent credit. You don’t want to pay for a costly credit mistake for years after following questionable advice.

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Deserve® Classic Card
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APR

24.49
variable

Annual fee

0 For the first year
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Luxury Card Mastercard® Gold Card™
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APR

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First Access Visa Card®
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Indigo® Platinum Mastercard® Credit Card
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