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Four Greatest Credit Card Myths

Aug-16-2017 By Frugal 101

Here are the most popular credit card myths:

1. My card isn’t really open until I activate it.

This is not true. If you decided to open a credit card, but then for some reason changed your mind, the damage to your credit score is already done. You score becomes lower as soon as the issuer pulls your credit report, which happens seconds after you apply.

2. Closing my credit cards will help me boost my credit score.

Wrong. Closing your credit cards is not going to boost your score. Actually, it will lower it. Your credit score is measured by the difference between how much you owe and how much credit you have available. By closing your cards you will shrink your available credit and will make the difference smaller.

3. I will never be able to afford anything unless I take loans and credit.

This is not true as well. This mentality got many people in the U.S. in debt. It is much cheaper and much smarter to save money before purchasing anything and then paying cash for it, then taking credit and paying hundreds of dollars in interest.

It is almost impossible to save money to buy a home of course, but it is realistic to save money for a washer and dryer, a new sofa, vacation or even a car.

4. If credit card companies are sending me applications, then my situation is not that bad. They wouldn’t have sent these applications if I wasn’t able to afford it.

Wrong. Credit card companies make money on people who can’t afford to pay off their bills in full.. They are sending you offers and applications based on mailing lists, but this is your responsibility to see whether or not you can afford another credit card.

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