Abhishek loves owning the latest gadgets and makes most of his purchases through his credit card. However, assumptions and myths surrounding credit cards made his life tough. Due to the wrong information he got about the use of credit cards, Abhishek ended up losing a lot of money as late payment fee or penalty. He, then, decided to manage his finances and credit life efficiently and stay away from silly credit card myths. Credit score, outstanding payments and the rate of interest being charged are some of the crucial things to keep a track of, while you use your credit card. Usually built on half-truths and word of mouth, the myths associated with credit cards can have a detrimental effect on your financial and personal life. Most of the people who apply for credit cards do so only due to the lucrative reward programs and points being offered to them by the bank.
When we apply for credit card, we don’t have any doubt regarding the security of our investment. However, it is crucial to expose some of the most common myths that might hamper your financial life.
The Actions You Take Change Your Credit Score
The credit score of every credit card holder is specifically designed to reflect their credit worthiness over a period of time. In case the card holder takes certain actions, whether good/bad, those actions aren’t really going to have a significant effect on the credit score immediately. The effect, good or bad, takes time to show; and if you take positive steps like reducing your debt level consistently and making all the payments on time, then the credit score will be in your favour. Always keep in mind that applying for a new credit card for availing a special offer won’t make much of a difference to the score and so you should act smart and try to focus on making timely payments.
You’ll Get the Promised and Advertised Rates
Most of the borrowers are offered the APR or Annual Percentage Rate by the bank. These rates are dependent on various factors such as the credit history, financial circumstances and the monthly income. It’s possible that you and your friend who applied for a credit card on the same day get different rates. So, it’s better to have a look at what exactly is being offered to you by the bank.
|ICICI Bank (Sapphiro Credit Card)||Complimentary Priority Pass, Exclusive Golf Privileges, exclusive movie screenings, culinary treats and many more|
|HDFC Bank (JetPrivilege HDFC Bank World)||Complimentary air ticket (Jet Airways), Rs 10, 000 bonus, renewal benefit, special tier points and many more|
|Standard Chartered Bank Credit Card||Online shopping (future bazaar, dominoes), travel, fashion and dining|
|SBI Bank (Signature Credit Card)||Signature welcome (one way air ticket from Indigo Airlines), special bonuses and fraud liability cover|
|HSBC (Signature credit card)||Fuel surcharge waiver, welcome gifts, redemption offers and many more|
As of 19th February, 2014
I Exceed the Limit and Pay Off All the Debts before the Due Date and I’m Fine
Exceeding the limit is quite common amongst the credit card users. However, if you ever feel that you might go over the limit, you must speak to your lender right away. Otherwise, you might land yourself in serious trouble as the rate of interest would be increased to high penalty levels.
My Credit Card Score Improves when I Leave Some Balance Every Month
This is another misconception which has hampered the financial lives of many individuals. Even if you leave the entire balance as it is, you won’t be able to take away the interest revenue from the credit card lender. You simply cannot improve your credit score by leaving some balance each month.
You Might Lose the Sign-up Bonus in case You Cancel the Card
Even though sign-up bonuses have minimum requirements for spending, you can benefit from them for a long period of time. The hotel points or airline miles bonus you got from your credit card sign up will remain with you even if you cancel the card. These sign up bonuses are credited directly to the user’s account and then there’s no going back.
Removing Negative Information from the Credit Report Possible Manually
Even though a lot of people wish this myth was true, it isn’t actuality. All the information in the credit report, whether negative or positive, cannot be altered manually under any circumstance. Hence, one needs to use a credit card sensibly and make timely payments.
Credit cards are strong financial tools that form an integral part of our life. If you wish to apply for credit card, you could get some information on https://www.bankbazaar.com/credit-card.html.