A credit card is one of the most common financial tools that almost everyone owns today. It is also known by the name plastic money and is one of the best financial tools available in the market. But also there are many credit card myths and facts that you may have heard.

The credit card application helps you go cashless and provides funds in an emergency. Using a credit card wisely helps to gain credit scores. Unfortunately, just like any other financial aid, there are tons of misconceptions surrounding credit card usage.

These credit card misconceptions and myths make the public doubtful to use this financial tool and prevent them from using their cards to their fullest potential.
Thus we are here to dispel some of the most common credit card myths and present some facts to help you in the future.

If you have been holding yourself back from getting a credit card, you may read on to get a complete idea of credit card myths and the facts right.

1. MYTH: Spending money is easy using Credit cards.

FACT: This is partially true as using a credit card makes spending money easy. One can swipe his card and purchase as much as he wants. And the user will not feel the pinch of paying hard-earned money.

On the other hand, this depends on the financial planning of every individual. If you are someone who is financially disciplined and has got a solid financial budget plan, you will not end up making so much expenditure. Instead, you would ensure that you don’t spend more than what you have decided.


  • You can create a budget plan and keep track of it.
  • Install a budgeting app on your phone to keep track of your expenses.

2. MYTH: Too many credit cards complicate finances.

FACT: It is always beneficial if you own more than one card. There may be cases when you might be receiving discounts or offers at a particular store on using a particular card. But the same offer might not be valid with other cards. Hence, having more than one credit card will increase your chances of grabbing great deals around your location when they are available.


  • To be eligible for the discounts and offers provided by various outlets, you will have to get 3-4 credit cards from different issuers.

3.MYTH: Too many credit cards can affect the credit score

FACT: This is a myth, as having too many credit cards can do not damage your credit score. This myth arose from the notion that keeping too many credit cards could make you fall into debt quickly.

It could be true in the case of spendthrift people, while others who keep a financial budget plan won’t end up spending more on anything. They would use their credit cards wisely and gain credit scores as every card provides them with rewards on every purchase they make.


  • Keep a check on your credit statements.
  • Avoid Spending too much on unnecessary items.
  • Limit online purchasing

4. MYTH: Using a debit card helps to improve your credit score

FACT: This is a false statement as using a debit card does not affect your credit score. Please know that there is no relation between your debit card and credit card in improving your credit score.

Both the cards have got different properties and serve different purposes. While using a Debit card, the money from the card holder’s account gets deducted immediately. You are paying the money for the item you purchased. It uses the money that you have in your account. There is no involvement of debt.

On the other hand, using credit cards means you are borrowing money from your financial institutions for a short period. And this amount has to be repaid with full interest before the due date. Please note that your repayment will be reflected in your credit score. It is the credit card that helps you increase your credit score.


  • Use a credit card only when it is necessary.
  • Use a debit card when you have enough money in your account.
  • Keep a check on your due dates, as to when you have to pay off your debts.
  • Pay off your credit card bill payments on time.

5. MYTH: Getting a credit card hike will make me spend more

FACT: Getting a hike on your existing credit card is an excellent thing as this indicates that you are a financially responsible person who uses his credit card most effectively. It shows that you are a great customer and that your lender or credit card issuer holds a good opinion of you. A higher credit limit helps to maintain a lower credit utilization ratio. In case of an emergency, you can use this card and get yourself the money you require.


  • If you don’t want to spend more than what you have planned, you can set spending limits on your credit card.

6. MYTH: Cancelling your credit card helps to improve your credit score.

FACT: This is again a strange myth as canceling credit cards cannot help you improve your credit score. If you don’t own a credit card, the financial institutions will find it quite difficult to offer you loans.

One should cancel a credit card if they own too many of them and if they want to consolidate the outstanding balance into one card. Otherwise, a credit card is one of the best financial tools out there that helps you get access to loans in no time.


  • Keeping track of all your credit cards, statements, and credit scores.
  • Cancel credit cards only if you feel you own too many of them from various banks

7. MYTH: While using Credit cards, too much interest is charged.

FACT: When you make payments using your Credit cards, you are borrowing money for a short term from your financial institution. You also agree to pay them back with interest.

When you use your credit card for purchasing, 2-3% of interest is charged a month. Interest will be charged on every purchase you make with a credit card. Credit cards give access to instant cash at low cost from anywhere, anytime.


  • Withdraw money using a credit card only when you have an emergency.
  • Make sure to withdraw a big amount of money in one go rather than deducting money several times in small amounts.

8. MYTH: Use credit cards to make payments, accumulate points and get great benefits.

FACT: The reward points that the customers get on using credit cards, aimed at luring the cardholders to spend more. People tend to spend more money purchasing products to earn more reward points. Hence, you must manage your finances wisely and spend money based on your financial budget plan.


  • Reward points lose their value over time hence don’t wait too long to accumulate a huge number of reward points.
  • Make it a point to use them whenever possible without any delay.
  • Find out whether your issuer allows you to adjust the reward points against the bill payments. If yes, then you may do so.

9. MYTH: Annual Fee for a credit card is non-negotiable

FACT: This is a myth as customers can negotiate the annual fees and get better deals from the credit card issuer. Most often, people hesitate to ask card issuers about such matters. They think it might create a wrong image and affect their credit score. But in reality, that is not the case as every credit cardholder has the right to negotiate the price with the bank. It will neither be reflected in your credit history nor impact your credit score.


  • If there is a need, you must negotiate the annual fees with your issuer.
  • Try to pay off your credit card debts before the specified period.

10. MYTH: To achieve a high credit score, you must maintain a balance on your credit card.

FACT: Always keep in mind that making regular payments and good financial habits increases your credit score, but having an outstanding balance does its exact opposite. Keeping balance in your credit card gives a wrong impression about the cardholder to your financial institution. And this might adversely affect your credit score in the future.


  • Never keep the balance on your credit card.
    These are some of the most common credit card myths and facts for applications, credit scores, and so on. We hope we have busted all the myths for you by providing you with facts. Try avoiding such myths, resolve your fallacy, and manage your credit card wisely.

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Join hands with our team and get assistance from our financial advisers to know more about such financial tools and services. For more information, you may check out our website.