3 Credit Card Myths - Debunked!
Having a hard time knowing what’s true and what’s not when it comes to credit cards? Here’s the scoop on some common credit card myths!
Myth: Opening a new credit card will damage my credit score. When you apply for new credit - whether it's a credit card or loan, a hard inquiry (or “hard pull") will appear on your credit report. Hard inquiries occur when the credit card issuer or lender checks your credit when making a lending decision. Hard inquiries will remain on your credit history for two years.
Truth: A hard inquiry could temporarily lower your credit score, but only usually by a few points. But while a single hard inquiry is unlikely to make a big difference, multiple hard inquiries in a short period of time should be avoided. In addition, occasionally using your credit cards and always paying your bills on time can help you achieve a strong credit history. Speaking of credit history, don’t forget RGCU provides you with your FICO® score on a quarterly basis- for free!
Myth: Debit is always better than credit. When using a credit card, it’s important to always stay within your budget and pay off the balance at least once a month. With our mobile app, you can transfer money in just a few seconds from your checking or savings to pay your balance.
Truth: Credit cards can earn you rewards and come with benefits that save you money. If you use our Rewards Visa® for everyday purchases, you can earn cash back, gift cards, travel and more—which can save you money. Use your card for expenses like groceries and gas, and you could earn a free ticket to a summer destination! Not to mention both our Rewards Visa® and Everyday Visa® come with some amazing benefits, such as cell phone protection, price protection, and travel benefits.
Note: If you tend to carry a balance, our Everyday Low-rate Visa® card might be a better option for you.
Myth: You should cancel any credit cards you’re not using. If you're not using a credit card, or if you're having trouble with credit card overspending, you may think it's best to close that account. However, don’t cancel those cards just yet.
Truth: Canceling credit cards may lower your credit score, especially if you are carrying any balances. Lowering your overall credit limit without reducing your balances will increase your credit utilization ratio, which accounts for 30% of your FICO® score. Closing a credit card account (especially an older one) can also shorten your credit history.
If you want to keep a credit account open while avoiding the temptation to spend, take the card out of your wallet and keep it in a safe place. Once you've paid off all your credit card balances, consider canceling the card you don't use.
Now that you know the truth behind some common credit card myths, you might be wondering what type of credit card is right for you. At Rio Grande Credit Union, we offer a variety of credit cards to help you borrow smarter and make life a little easier. Whether you're looking for rewards, a low-rate or to build / rebuild credit, we have smart options for every situation!