Like other Americans, South Carolinians generally depend on credit cards to sustain a comfortable lifestyle. According to the National Debt Relief, every household in the Palmetto State owes $5,371 in credit card debt on average in 2017. While practically every adult in the United States pays with plastic, credit cards remain widely misunderstood.
Ignorance begets terrible decisions, unnecessary charges, and wasted benefits. To make the most of your credit cards in Richland County, or any nearby areas, experts at Palmetto Citizens Federal Credit Union debunk these popular myths:
Applying to Banks Is the Only Way
Other than banks, cooperatives can also issue credit cards to their members. In fact, nonprofits provide highly competitive rates because they exist to offer low-cost financial services, and not make a ton of money.
Having More than One Card Is Bad
The number of credit cards you own wouldn’t hurt your credit score. Rather, it’s the way you use them. Having more than one card can help build your credit faster for as long as you utilize them responsibly.
Maximizing the Credit Limit Has No Implications
Credit utilization is one of the most impactful factors that affect your credit score. When you apply for a loan, lenders will scrutinize your credit card balances relative to your credit limits. Generally, you wouldn’t get brownie points for owing more than 30% of your credit limit.
Closing Unused Cards Is Good
Unused credit cards are not necessarily useless. Keeping them helps increase your credit score because they bring your overall utilization rate down. If you have an old card with an excellent payment history that you no longer use, closing it would pull your credit score down.
Saving Money Isn’t a Benefit of Paying with Plastic
Putting expenses on plastic is only one of the many benefits of credit cards. Most of them offer perks and act like insurance, which can save you real money when you travel or fall victim to theft.
Making Just Minimum Payment Monthly Is OK
Paying just the partial balance monthly is the familiar beginning of debt cycles. The unpaid portion of your bill will be carried over to the next, incurring your interest. Also, missed, late, and incomplete payments are negative items in your credit history.
Credit cards are useful tools to be more flexible with your finances and help you monitor your monthly budget. The more you understand how they work, the more you can use them to your advantage.