To all our members impacted by the storm, we’re here to help. 
    Please call the Member Service Center at 800-688-7228 so we can work together to find the best solutions for you. And for members who need assistance with your Manufactured Home loan, please call our team of MH specialists at 866-310-2143 to discuss available options.

    Credit Card Myths Debunked

    11/6/2024
    2 minutes
    Separating fact from fiction so you can make more informed financial decisions.

    Credit cards have become a staple in our daily financial lives, offering convenience, security and a means to build credit. However, they are also surrounded by many misconceptions. We’re debunking some common myths to ensure you have all the facts to make the best financial decisions.

    KEY TAKEAWAYS
    • Credit cards are a valuable financial tool but also the source of many myths and misconceptions.
    • Some myths include the notion that carrying multiple cards is bad, closing a card is good and that credit card companies want you to stay in debt.
    • Using a credit card does not mean you’re struggling with debt. When used responsibly, credit cards offer financial benefits that can improve your financial health.
    MYTH: Having Many Credit Cards Hurts Your Credit Score

    The number of credit cards you have doesn’t inherently affect your score. What matters is how you manage them. Struggling to keep up with payments or accumulating high balances can negatively impact your score. Conversely, if you manage multiple cards well by paying on time and keeping your credit utilization low, having several cards can actually improve your score. A diverse mix of credit types can demonstrate responsible credit management to potential creditors.

    MYTH: Carrying a Balance Helps Build Credit

    While establishing credit history is important, maintaining a balance can cost you unnecessary interest and doesn’t significantly impact your score. To build a solid credit history, use your credit card regularly and pay the balance in full and on time each month. Prompt payments and low credit utilization positively impact your score.

    MYTH: Credit Card Companies Want You to Stay in Debt

    While credit card companies do earn from interest and fees, they profit more from responsible card usage and timely payments and will often offer rewards and incentives to promote this. When opening a new line of credit or switching creditors, look for benefits like zero interest periods, no annual fees and rewards programs that align with your financial priorities.

    MYTH: Closing a Credit Card Improves Your Credit Score

    Closing an older account can shorten your credit history, which makes up 15% of your credit score. Additionally, if you have other cards with balances, closing one reduces your total credit limit, potentially increasing your utilization ratio and negatively impacting your score. If you’re not using a credit card anymore, consider keeping it open with a zero balance.

    MYTH: Using a Credit Card Means You’re in Debt

    Using a credit card doesn’t automatically mean you’re in debt. In fact, credit cards can help you build a strong credit history. Debt happens when you carry a balance and pay interest on it. There’s no shame in using credit cards as they can positively impact your financial health.

    If you or someone you know is struggling with debt, there are options to recover, and we are here to help. For personalized financial guidance, visit a Financial Health Center.

    Additional resources you may like:
    Applying for Credit
    Smart Tips for Credit Card Users
    Proven Strategies for Successful Debt Repayment
    Debt Consolidation