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When it comes to our understanding of credit cards, it’s surprisingly easy to fall prey to misconceptions and false beliefs. We’re here today to help clear the fog surrounding credit cards and debunk five common credit card wrong beliefs that have somehow become ingrained in our collective consciousness.
Myth One: You Must Carry a Balance to Build Credit
Many people believe that carrying a balance on their credit cards is a way to build a healthy credit score. This is a widespread credit card misunderstanding. Maintaining a balance can harm your credit score as it increases your credit utilisation ratio – the amount of credit you’re using compared to your credit limit. A high ratio can negatively impact your credit score. The best practice is to use your credit card regularly for purchases and pay off the balance in full each month, thereby demonstrating responsible credit use.
Also Read: What is my IndusInd Credit Card Statement Password?
Myth Two: All Debt is Bad Debt
Another common myth is that all debt is bad. However, not all debt is created equal. While it’s true that excessive credit card debt can lead to financial trouble, credit cards can also be a tool for building a strong credit history when used responsibly. Remember, lenders often look at your credit history when considering loans or mortgages, so demonstrating responsible credit card use can actually be beneficial.
Myth Three: Credit Cards are for Emergencies Only
Some people believe credit cards should be tucked away and only used in emergencies. However, this belief can limit the potential benefits of credit cards. Many come with rewards programs, cashback offers, or travel benefits that can provide real value when the card is used regularly. Remember, the key is to pay off your balance in full each month to avoid interest charges.
Myth Four: Credit Card Interest is Inevitable
Many believe that interest charges on credit cards are unavoidable. This is another credit card misunderstanding. Interest is only charged when the balance is not paid in full by the due date. If you pay your balance in full each month, you can enjoy the benefits of your credit card without incurring any interest.
Myth Five: Credit Card Limit is the Spending Limit
Many assume that the credit limit is the amount they can or should spend. However, consistently maxing out your credit card can lead to a high credit utilisation ratio, which could harm your credit score. A good rule of thumb is to keep your credit utilisation ratio below 30%.
Now that we’ve debunked these common credit card wrong beliefs, let’s shed some light on how to avail a credit card.
Also Read: What is my SBI Credit Card Statement Password?
How to Avail a Credit Card
Availing a credit card involves meeting certain eligibility criteria set by the card issuer. These typically include age, employment status, and income level. Your credit score is another crucial factor. A high credit score indicates to lenders that you’re a responsible borrower, increasing your chances of approval.
Before applying, it’s wise to compare different credit cards and understand their interest rates. If you plan to carry a balance month to month, you’ll want to opt for a card with a lower interest rate. Many lenders provide an EMI calculator on their websites to help you understand what your repayments might look like.
Apply for the Airtel Axis Bank Credit Card
If you’re looking for a credit card that has flexible repayment terms, low interest rates and cashback offers, then opt for the Airtel Axis Bank Credit Card. This card provides up to 25% cashback on Airtel recharges, WiFi, DTH, 10% cashback on utility bill payments, 1% cashback on all other spends, annual savings of ₹16,000, domestic airport lounge access 4 times a year and lots more. You can apply for this credit card via the Airtel Thanks app.
Remember, credit cards can be a powerful financial tool when used responsibly. So, don’t allow common misunderstandings to cloud your judgement or hamper your financial decisions.
Also Read: What Is The Credit Card Grace Period And How Does It Work?
Conclusion:
In dispelling these common credit card wrong beliefs, we have shed some light on how credit cards truly function. Understanding these intricacies enables us to make informed decisions, manage our finances effectively, and fully harness the potential of these financial instruments.
Ultimately, the more we understand about credit cards, the better we can use them to our advantage. So, let’s pledge to keep questioning, keep learning, and most importantly, keep debunking those credit card misunderstandings. Because knowledge, as we know it, is power. And in the realm of credit cards, it’s the power to utilise credit to improve our financial health and achieve our financial goals.
FAQs:
Do you need to carry a balance on your credit card to build credit?
You do not need to carry a balance on your credit card to build credit. In fact, it’s better to pay off your balance in full each month. This shows lenders that you are responsible for credit.
Is all debt considered bad debt?
No, not all debt is bad. While excessive credit card debt can lead to financial problems, having some debt and paying it off responsibly can actually help build your credit score.
Should credit cards only be used for emergencies?
No, credit cards can be used for everyday purchases as well. Many cards offer rewards, cash back, or travel benefits that can provide real value. However, it’s important to pay off your balance in full each month to avoid interest charges.
Is it inevitable to incur interest charges on credit cards?
No, interest is only charged when the balance is not paid in full by the due date. If you pay your balance in full each month, you can avoid interest charges.
Is the credit card limit the amount you should spend?
No, consistently maxing out your credit card can lead to a high credit utilisation ratio, which could negatively impact your credit score. A good rule of thumb is to keep your credit utilisation ratio below 30%.
