Taking out a credit card is something quite a few of us might do without too much prior thought. They can come in handy for shopping sprees or in emergencies when there’s not enough money in your current account to pay for basics like food, toiletries or clothes. But some might wonder what, if anything, they can actually offer in terms of perks and benefits; not to mention the impact they can have on credit ratings.
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To try and make them more appealing, some credit card providers will try and add a few benefits and rules designed to supposedly make them worth having. There are quite a few myths circling credit cards in general, but what are the most common, and why shouldn’t they be believed? Here are a few:
Paying back what you can is enough
If you’re struggling to keep up with credit card repayments, you might feel that paying part of what you owe back will help to keep the providers happy. Sadly, this isn’t true, as all credit cards come with the proviso that a minimum amount should be paid back in installments or in one go. Anything less than the minimum required payment won’t help to keep you in the good books.
You can remove negative credit card history from your credit report
Another myth that sounds too good to be true. It’s almost impossible to change anything on your credit report instantly, but in order to improve your history; it might be worth being a little more careful the next time you take out a credit card. As for negative credit card history, it will always take at least seven years for it to be removed from any credit report.
Applying for a credit card will harm your score no matter what
Thankfully, this isn’t true either. If you apply for a credit card, you will incur debt, but if you repay what you borrow with the card on time, then your credit score may actually improve. The only negative impact that taking out a credit card can have on your credit rating is if you fall behind schedule with repayments. A spokesperson from Yorkshire Building Society suggested:
“Set up a regular savings account and shop around to make sure you get the best rate. Ensure that you are on the electoral roll as this can improve your credit score. Review your day-to-day spending to see if you can make any cuts to increase your savings, then set up a budget for essentials and stick to it.
Added extras aren’t worth the hassle
Sometimes, it can take a while for added extras for credit cards such as Air Miles and Nectar Points to add up, but they’re not completely worthless. Some perks such as 0% balance transfer can actually be worthwhile. However, it’s advisable not to make a decision on which credit card to choose based on the reward schemes and extras alone.