Many financial articles revolve around credit cards. Some experts say that credit cards are necessary for building credit. Others claim that you don’t need to open a credit card account to be financially savvy. There are so many conflicting ideas out there that it can be difficult to determine the right path to take.
Building credit is necessary because it can help you qualify for significant purchases. It ‘s best to have a good credit score to buy a home, a car, or new appliances. When you try to rent a house or apartment, property managers will run your credit score during your background check to determine whether or not you, as a renter, are a financial risk.
Many believe the easiest way to begin building credit is through a credit card. Consumers have several different types of credit cards to choose from. There are cash back cards, cards that earn points or airline miles, and cards attached to a particular store like Target. Before signing up for a new credit card, take a look at 40 common credit card myths that are easily debunked starting here:
1. Credit Cards Are Free Money
Although credit cards are in no way free money, many people view them like that. Every time you use a credit card, you should have the same amount available in your wallet or bank account to ensure that you can truly afford your purchase. It’s not worth it to buy something for $50 and end up paying hundreds of dollars in interest if you miss a credit card payment.
Treating your credit cards like free money can end up costing you much money for months and even years. Before making a purchase, wait at least 24 hours. Think about what else you can spend your money on. Consider how many hours you’ll need to work to pay the purchase off. Also, you can remember if there was ever a time that you made a similar purchase and regretted it afterward.