Credit Card Myths Debunked: Separating Facts from Fiction

Credit cards have become an essential element of our modern financial landscape, allowing us to conveniently make transactions while also building a credit history. These little plastic cards, however, are frequently cloaked in myths and misconceptions. We hope to dispel some of the most popular credit card myths in this post and distinguish fact from fiction.

Myth 1: Having multiple credit cards will ruin your credit score.

Fact: It’s a frequent myth that having many credit cards hurts your credit score. In actuality, it’s not the quantity of cards you have that affects your credit score, but how you use them. When used appropriately, having numerous credit cards can improve your credit score by increasing your overall available credit and displaying your capacity to manage multiple credit lines.

Having said that, it’s critical to keep your credit utilisation ratio under control. This ratio compares the amount of credit you’re utilising to the total amount of credit available to you. To keep your credit score healthy, keep your utilisation below 30%.

Myth 2: Closing a credit card raises your credit rating.

Many people believe that canceling a credit card can improve their credit score. Closing a credit card account, on the other hand, can have the opposite effect. Closing an account reduces your total available credit, which raises your credit utilization ratio. Furthermore, if the closed account has a good payment history, it will be erased from your credit report, potentially affecting your credit score.

Consider leaving a credit card open instead of canceling it, especially if there is no annual fee. To keep an active credit history, use it just for little purchases and pay off the sum in full each month.

Myth 3: Carrying a balance helps improve your credit score.

Fact: Some people believe that carrying a credit card balance and paying interest will help them improve their credit score. This is entirely incorrect. Carrying a balance and paying interest does not help you create a good credit history. Indeed, it can lead to unnecessary interest costs and financial distress.

It is critical to make on-time, complete payments each month in order to have a strong credit history. Paying down your amount on a regular basis demonstrates prudent credit management and contributes to the improvement of your credit score over time.

Myth 4: Applying for a credit card always has a negative impact on your credit score.

While applying for a credit card will result in a hard inquiry on your credit report, the impact on your credit score will normally be minimal and transient. As long as you don’t apply for several credit cards in a short period of time, the effect will fade over time.

Applying for a new credit card can even improve your credit score in the long run. Opening a new account boosts your total available credit, which may improve your credit utilization ratio provided you keep your balances modest.

Myth 5: You need to carry a balance to build a credit history.

Fact: Building a credit history does not necessitate holding a credit card balance. Simply using your credit card for frequent purchases and paying off the debt in full each month contributes to establishing a good payment history. This displays your capacity to appropriately manage credit and contributes to the development of a strong credit score.

Carrying a balance is unnecessary and can result in extra interest costs. To build a great credit history, use your credit card carefully and pay off the debt on time.


In conclusion, when it comes to credit cards, it is critical to distinguish between fact and fiction. Credit card myths can frequently lead to misunderstanding and poor financial decisions. We may obtain a better grasp of how credit cards work and how to use them properly by refuting these myths. Remember, owning multiple cards does not automatically harm your credit score, closing a card may negatively impact your credit, carrying a balance does not help your credit score, applying for a card has a minimal impact, carrying a balance is unnecessary for building credit history, and credit card terms vary widely. We may effectively use credit cards to our benefit by utilising them properly, paying off amounts in full, and making informed decisions.

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