Common Credit Card Myths Debunked

by | Jun 11, 2012 | Personal Finance

Credit Card MythsAlthough credit cards have been used since the 1960s, there are several untrue myths which still persist about them in society.

Understanding the truth behind these common myths will help you to use your credit card more effectively.

You Can Write “See ID” Rather Than Signing Your Name on the Back of the Card

Many people have used this trick because they think that it makes their card more secure.

Their logic is that the signature could be copied and used by fraudsters and that having the clerk check ID rather than looking at the signature will stop thieves from using their credit cards.

However, there is little need to do this at all.

If your credit card is stolen, all you need to do is report it to the credit card company right away and you will be absolved of any purchases made on the card afterwards.

Having a Low Limit Will Help Your Credit

You might have thought that keeping your credit limit low was the best way to help boost your credit score.

However, the trick is to actually have a large available limit and only use a small portion of it.

Lenders like to see that there is a large gap between what you have available to you and what you are using.

However, on the other hand if you can’t trust yourself to resist the temptations of a large limit then you should probably leave your credit limits alone.

If You Continue to Pay the Minimum Amount Due, You Will Eliminate Your Debt

While you might pay it off eventually, it will take several years or even decades to pay off the principle if you are only making the minimum payments.

This is because you are only paying for the interest and not bringing down the total amount of the loan.

These are just a few of the common myths about credit cards and their use which are untrue and yet have still persisted for many years.