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 BankAmericard 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 Double Cash. It offers 1% cash back on all spending and another 1% as you pay off your purchases. Like the BankAmericard Travel Rewards, 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 REDcard 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

Rates last updated May 27th, 2018
Name Product Product Description APR for Purchases ( Purchase Rate ) Bonus Points Interest Free Period
primor® Secured Mastercard® Gold Card
Low fixed interest rates with no penalty rate.
9.99% fixed
Up to 25 days
Platinum Prestige MasterCard® Secured Credit Card
You can increase your credit limit by adding funds to the initial deposit.
9.99% variable
Up to 25 days
OpenSky® Secured Visa® Credit Card
A secured Visa® credit card that helps you build your credit quickly.
18.64% variable
Up to 25 days
 Applied Bank® Secured Visa® Gold Preferred® Credit Card
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.
9.99% fixed
0 interest free days
Platinum Elite MasterCard® Secured Credit Card
With just a security deposit and 19.99% variable APR, start building or rebuilding your credit history.
19.99% variable
Up to 25 days
UNITY Visa® Secured Credit Card
Borrow up to $10000 and get your credit score back on track.
17.99% fixed
Up to 25 days
Savings Secured Visa Platinum Card
Created to help you establish or rebuild credit.
13.24% variable
Up to 21 days
SKYPASS Visa® Secured Card
Earn SKYPASS miles while building your credit history in the United States.
17.49% variable
5,000 bonus points
Up to 24 days
First Latitude Platinum MasterCard® Secured Credit Card
First Latitude Platinum MasterCard® Secured Credit Card
Enjoy no annual fees while building your credit
25.99% variable
Up to 25 days

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

Rates last updated May 27th, 2018
Name Product APR for Purchases ( Purchase Rate ) Intro APR for Balance Transfer Annual fee Product Description
Amex EveryDay® Preferred Credit Card
14.24% to 24.24% variable
0% Intro APR for 12 months (with whichever is greater, $5 or 3% balance transfer fee)
$95
Earn 15000 Membership Rewards Points after you use your new Card to make $1,000 in purchases in your first 3 months.
Chase Freedom® credit card
16.24% to 24.99% variable
0% Intro APR for 15 months (with whichever is greater, $5 or 5% balance transfer fee)
$0
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate and unlimited 1% cash back on all other purchases.
HSBC Cash Rewards Mastercard® credit card
14.49%, 18.49% or 24.49% variable
0% Intro APR for 15 months (with whichever is greater: $10 or 4% balance transfer fee)
$0
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees
Apply now Read review
Deserve® Classic Card
24.24% variable
$39
Designed to help build credit history with no deposit required and access to benefits.
Apply now Read review
Chase Slate® Credit Card
16.49% to 25.24% variable
0% Intro APR for 15 months (with $0 for transfers in first 60 days. Then $5 or 5% balance transfer fee)
$0
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
Luxury Card Mastercard® Gold Card™
16.49% variable
0% Intro APR for 15 billing cycles (with the amount of each transfer, $5 or 3% balance transfer fee)
$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.
Apply now Read review
Indigo® Platinum Mastercard® Credit Card
23.9% variable
$75 annual fee for the first year ($0 to $99 thereafter)
With this card you get a 23.9% variable APR.
Apply now Read review
Credit One Bank® Visa® with Free Credit Score Tracking
17.49% to 25.49% variable
$0 to $75 first year annual fee for the first year ($0 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.
Apply now Read review
The First Access VISA® Credit Card
29.99% variable
See Terms
Access credit even if you have poor or limited credit history.
Apply now Read review
Barclaycard Arrival Plus® World Elite Mastercard®
17.24%, 21.24% or 24.24% variable
0% Intro APR for 12 months (with whichever is greater: $5 or 3% balance transfer fee)
$0 annual fee for the first year ($89 thereafter)
Enjoy 40000
bonus miles after you spend on purchases in the first 90 days — that's enough to redeem for a $400 travel statement credit toward an eligible travel purchase.

Compare up to 4 providers

Rates last updated May 27th, 2018
Name Product Product Description APR for Purchases ( Purchase Rate ) Bonus Points Interest Free Period
primor® Secured Mastercard® Gold Card
Low fixed interest rates with no penalty rate.
9.99% fixed
Up to 25 days
Platinum Prestige MasterCard® Secured Credit Card
You can increase your credit limit by adding funds to the initial deposit.
9.99% variable
Up to 25 days
OpenSky® Secured Visa® Credit Card
A secured Visa® credit card that helps you build your credit quickly.
18.64% variable
Up to 25 days
 Applied Bank® Secured Visa® Gold Preferred® Credit Card
This secured card can help you rebuild your credit with an initial deposit of $200 to $1,000.
9.99% fixed
0 interest free days
Platinum Elite MasterCard® Secured Credit Card
With just a security deposit and 19.99% variable APR, start building or rebuilding your credit history.
19.99% variable
Up to 25 days
UNITY Visa® Secured Credit Card
Borrow up to $10000 and get your credit score back on track.
17.99% fixed
Up to 25 days
Savings Secured Visa Platinum Card
Created to help you establish or rebuild credit.
13.24% variable
Up to 21 days
SKYPASS Visa® Secured Card
Earn SKYPASS miles while building your credit history in the United States.
17.49% variable
5,000 bonus points
Up to 24 days
First Latitude Platinum MasterCard® Secured Credit Card
First Latitude Platinum MasterCard® Secured Credit Card
Enjoy no annual fees while building your credit
25.99% variable
Up to 25 days

Compare up to 4 providers

Rates last updated May 27th, 2018
Name Product APR for Purchases ( Purchase Rate ) Annual fee Product Description
Target REDcard™ Credit Card
24.15% variable
$0
A no annual fee credit card and discounts when you shop at Target.
Fingerhut Credit Account
26.15% variable
$0
The Fingerhut Credit Account is store-specific, and used to finance purchases made from Fingerhut.com or Fingerhut FreshStart’s catalogue.
Fingerhut Advantage Revolving credit account
26.15% variable
$0
Helps you keep building your credit as you buy great name brand products.
Fingerhut FreshStart® credit account
26.15% variable
$0
Get instant access to purchase items in the Fingerhut store with no overlimit fees.
Horizon Gold Card
0%
Get a 500 credit limit to make purchases on the Horizon Outlet website.
NetFirst Platinum (shop.thehorizonoutlet.com)
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!
Luxe Signature Card
0%
$0
For purchases on HuttonChase.com with a maximum credit limit of $1500.00.
Next Millennium Card
0%
Shop the items you need at myuniqueoutlet.com with up to a $1000 credit.
Emporium Card
Varies by balance. See website for details*
$0
Get a $300 to $5000 instantly to shop 100,000+ items at Emporium.
Walmart Credit Card
23.90% variable
$0
Overstock Store Credit Card
28.24% 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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US Credit Card Offers

Important Information*
Deserve® Classic Card
Deserve® Classic Card

APR

24.24
variable

Annual fee

0 For the first year
More info
Luxury Card Mastercard® Gold Card™
Luxury Card Mastercard® Gold Card™

APR

16.49
variable

Annual fee

0 For the first year
More info
The First Access VISA® Credit Card
The First Access VISA® Credit Card

APR

29.99
variable

Annual fee

See Terms For the first year
More info
Indigo® Platinum Mastercard® Credit Card
Indigo® Platinum Mastercard® Credit Card

APR

23.9
variable

Annual fee

75 For the first year
More info
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