As we are ready to head out for holiday shopping there is no doubt you will be taking out your credit card for most, if not all, purchases. While that could scare some about having a credit card balance, it doesn’t mean that it’s all bad. In fact, if used right, credit cards can make a lot of financial sense even based on the fraud protection and rewards that they provide. That doesn’t mean they don’t get a bad reputation, and there are some myths about credit cards that can be avoided, because they just are not true at all.
You Don’t Need a Credit Card
Why sure, you can probably get through your everyday life without a credit card, but if you do not have a credit card you probably do not have much of a credit history. If you want the best interest rates on the market when it comes to buying a house, getting a loan, or a credit card, you need an excellent credit score, otherwise any increase in APR will cost you money. By having a credit card, using, and paying off each month, you can develop a solid payment history, not to mention have credit line increases as well.
Close the Account When Balance is $0
Debt can be a scary thing, especially if you are in so deep that it takes years to get out of. By the time you come out and see that zero balance you may not want to tempt fate and have that available credit to you any longer. While that is something to be proud of to get the balance down to zero, closing the account could actually hurt you. It can actually help to keep the account open, but cut up the card so you don’t use, but still have that available credit to your name.
Accepting a Credit Line Increase Will Hurt Your Score
While sure, the creditor is trying to get you to see the credit line increase and want you to go on a spending spree to charge that much more on your account, but accepting a credit line increase can actually help your score, not hurt it. If you use to your advance and accept the credit line increase, you can now increase your available credit and increase your credit utilization, so it can actually increase your score. Just be careful not to see that higher line and want to charge more than you can afford to pay the full balance.
The Name on the Card Matters
You will likely get credit card offers in the mail daily, with “Gold”, “Silver”, “Platinum” added to the name to try and stick out, but the truth is, you really should only care about two things: the APR, the interest on your charges if your carryover a balance, and the rewards, what you can get back on the purchases you make, whether that is in miles, points, or even dollars. If you charge and pay the full balance by the due date, you can actually just focus on the best rewards card available.