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The Worst Advice About Credit Cards That You Should Never Follow!

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Owning a credit card comes with its own advantages and disadvantages. At times things work out well, whereas at other times you may end up using your card in a wrong way. The key to use a credit card properly is knowing what works and what does not.

Family and friends do shell out advice constantly about cards. But not all advice are correct. Some common notions about cards are not worth considering at all. Know what these are and use your card wisely. Let’s check the worst advice about credit card usage.

1. Own as Many Cards as Possible

Usually this advice is doled out to emphasise that you can earn maximum benefits with maximum cards. And it will always be shared by someone who can afford so many cards. But that is not the case with everyone else. Multiple cards can make you develop a habit of spending unnecessarily just to enjoy the benefits.

This can lead to credit card debt. If you are unable to afford the annual fees and bills, then any benefit you derive from any card is nullified. So, do not go by the lifestyle of others. Check your budget and financial standing while choosing to own credit cards.

Tip: Own a card or cards only if you are able to afford them.

2. Pay Only the Minimum Due

This advice is quite common among cardholders. Usually, this advice is given by those who pay only minimum due each month. It is like bearing as minimum responsibility as possible while trying to ignore the bigger picture.

Paying only the minimum due will prolong your card debt. Additionally, you will incur more costs with your payable interest. The wise decision would be to clear your debt as soon as possible.

Tip: Pay the full amount each month and save money on interest charges.

3. Max Your Credit Limit

This advice is usually offered by those who can afford maxed out card bills or those who pay only minimum due. Maxing out your credit limit not only adds to your debt, but also decreases your credit score.

The recommended usage is 30% of your credit limit. Anything more than that, will affect your credit score. And reaching the maximum limit will result in high interest rates if you do not pay immediately. Other reason to not max out your card is that you need available limit for any unforeseen emergency.

Tip: Utilise up to 30% of your total credit limit.

4. Close Unused Card Accounts

This advice will be offered only by those who do not know exactly how card accounts co-relate to credit score. An essential factor of your credit score is the length of the credit history. This means closing any old card account would make it look as if you have a short credit history.

Banks prefer a long and excellent credit history, especially while lending financing for a mortgage or for a high amount. The longer your credit history is, the better is your credibility.

Tip: Do not close old or unused card accounts.

5. Apply For Multiple Cards at the Same Time

This advice will be given by those who do not know that multiple applications can affect the credit score. When you apply for multiple cards with different banks, each bank would perform a credit check on you. Each check would decrease your score.

Additionally, banks would know that you have applied at multiple sources, and may reject your application if you seem too desperate. The best thing to do is to research on all cards that you are eligible for, and choose to apply for the one that is the most suitable.

Tip: Compare quotes on different cards before you apply for a card.

6. Credit Cards Are Not Required

This advice will be given by those who have no need to build a credit score due to ample savings or inherited wealth. Credit cards are quite important to establish your credit score. Debit cards do not contribute to your score.

Any working individual should have a credit score for purchasing various financial products and services in the future. So, get a credit card, but use it wisely. Do not use your card for unnecessary expenses. Pay off the full balance each month.

Tip: Manage your card properly to establish an excellent credit score.

Things to Do With Your Credit Card

  • Own only the cards that you can afford.
  • Do not carry a balance into the next month.
  • Use only 30% of your credit card limit.
  • Do not close old or unused card accounts.
  • Pay your card bills on time.
  • Monitor your card usage each month.
  • Use your card to build a reputable credit score.

Make the Best Use of Your Credit Card

A credit card will prove to be a valuable financial tool if you use it wisely. Learn more about credit cards and how they operate to know exactly what to do with them. Before you follow any advice on card usage shared by others, research on it to check whether it is true.

Follow any advice only if it benefits you, now and in the long run. Build a credible history with your card now, and easily get access to various banking products and services when required.

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