Credit card is one of the major financial tools that makes your daily life easier and hassle-free. However, you may be receiving mixed messages about credit cards.  Misconceptions about credit card can be a roadblock on your path to financial well-being. A credit card is very helpful for meeting unforeseen expenditures of your life. Additionally, you can leverage more benefits from credit card through reward points, offers, cashbacks and much more. This article helps you to understand about a few common myths about usage of credit card.

• Holding a credit card may reduce credit score

It is a common myth that holding a credit card may reduce credit score. In fact, credit card can assist you to boost your credit score, if you repay your dues on time.  Your credit score will be impacted only if you do not pay your credit card bill on time. Missing a payment is the biggest way to hit your credit score. Having a robust financial discipline to pay your credit card dues will always be helpful to maintain a healthy credit score.

• You should not have multiple Credit Cards

You can always own multiple credit cards, though one credit card is enough. Owning one credit card means you only have one set of annual fee and monthly credit card dues to pay. However, that doesn’t mean that you should be limited to one credit card for the rest of your life, especially if you’ve built great financial discipline. Having multiple cards can help you curb overspending on one card and in turn reduce the credit utilization, which is the percentage of credit utilised versus your sanctioned credit limit. Having multiple credit cards also helps you to enjoy a wider variety of offers and perks.

• Don’t Make Everyday Purchases on Your Credit Card

Some people believe that it is best to avoid using your credit card for food, clothing, cooking gas and other everyday items. Not necessarily. If you are organized and disciplined, using a credit card for everyday items can help you to leverage cash backs, discounts, and reward points. Based on your spending habits, some banks may offer personalized offers too.

• Credit cards make you a shopaholic

A credit card is a convenient mode of payment. Also, it eliminates the hassles of carrying cash with you. Your monthly spends depends on how financially disciplined you are. No worries, if you are preparing and keeping track of a budget for monthly expenses.

• It is OK to pay the minimum due amount every month

It is a common myth that paying off the minimum amount is enough. In fact, paying off the minimum amount can save you from incurring late payment penalty. Remember that you will be charged interest on the remaining outstanding balance of your credit card. It is also to be noted that the interest will be calculated from the date of transaction. Hence it is recommended to keep track of your credit card dues and repay the dues on time or convert them to EMIs.

Bottom Line

Credit card is a convenient mode of payment for online as well as at shops. Plastic money helps you eliminate worries of carrying cash. However, you are required to have robust financial discipline to keep track of your expenses as well as to pay the dues on time.