There are tons of people with similar earnings but varying financial standings. This can be due to differences in circumstances, but poor credit knowledge also contributes to this.
Multiple credit card myths have been in circulation, causing unfavorable monetary management. But, as luck would have it, no one needs to be stuck in the wrong when it comes to financial literacy. So, we have here the credit card myths you should unlearn to best handle your value.
Credit Cards As Necessary Prerequisites To Building Credit
On the contrary, the opposite is true: you don’t need to carry multiple balances to build good credit. Instead, you should incur several small debts and always pay your bill in full to avoid accumulating interest. These unnecessary additions are detrimental to your financial stability.
Canceling Inactive Credit Cards
It seems like a wise decision to cut off any subscriptions that are not in use. However, this is different when maintaining credit card lines.
When you cancel a credit card, you decrease the amount of credit under your name, which is a bad reflection of your credit score. Additionally, your current debts can increase because of the sudden changes to your assets. So, even if you are not using all of your credit cards, don’t get rid of them unless absolutely necessary.
Multiple Credit Cards = More Financial Mismanagement
A common misconception is that owning various credit cards leaves one in immense debt and reflects poorly on your score. However, that is not farther from the truth. On the contrary, while having multiple credit cards increases the financial risks, it is not considered a factor in calculating your credit score.
There are numerous ways that your credit score can decrease, and they are dependent on how you manage your cards and not their quantity.
Late Payments Instantly Decrease Your Score
One of the terms of availing credit is that you should pay your balances back regularly over a period of time. Understandably, late payments and insufficient installments are unfavorable for companies and the credit owner themself. However, missing settlements are not the end of your financial standing.
Don’t get us wrong, late or missing payments do negatively impact your score but not instantly. There is leeway for redemption. Just make sure to settle your debt within thirty days of the deadline. Banks and lenders usually only sanction overdue fees up to twenty-nine days past the due date, or you can have this waived on your first penalty. Any time later than that will do irreparable damage.
Credit Card Terms Are Set In Stone
Many people are fearful and hesitant of availing credit cards because they are under the false belief that the terms and conditions are non-negotiable and incredibly strict. The truth is, you have the upper hand since banks and companies want to keep their clients. Consequently, they are more than willing to adjust to accommodate your needs. For example, you can work out different arrangements if you find that your interest is too high.
Cash Advances Are Better Than Online Loans
Finally, it is inevitable for those availing credit that they would also need liquid assets. Unfortunately, most believe getting cash advances from credit cards is the best way to accomplish this. While it is a viable option, there are better ways to acquire cash, one of which is online loans.
Compared to credit cash advances, online loans are more lenient, affordable, and easier to pay back. Additionally, they are more convenient and reduce the need to undergo tedious processes. You only have to submit a few documents and wait for the approval. Once accepted, the cash gets transferred instantly and is ready for use.