Myths About Credit Cards You Really Should Stop Believing

Credit cards are a ubiquitous part of a consumer’s life. The ease of use that credit cards bring, coupled with the fact that you can make purchases with it even though you don’t have the money right at that moment, makes it an especially useful and powerful financial option. Unfortunately, as much as American consumers like using their credit cards, many of them are unaware of the many tiny details regarding their credit cards. There are also many myths that are circulating about credit cards, some of which have the potential for causing financial ruin to those who make the mistake of believing them. Here are some of these myths and the truth that you ought to know.

Carrying A Balance Is Good For You

Well, this one really depends on who “You” are. If “you” refers to your credit card company, then you carrying a balance on your credit card is definitely a good thing – for them. Credit card companies call this revolving debt. Revolving debt is when you maintain a balance at the end of each month. Probably, you are only paying the minimum amount due every month. Credit card companies love it when credit card holders maintain a revolving debt. You see, a large part of your minimum monthly payments go to interest and fee payments. Only a small amount actually goes to paying down your debt. So, the longer you maintain a balance, the more your credit company earns from you. Conversely, the more you lose.

Nobody Can Sue You For Debt Payment If You Don’t Have Money

This one depends on the fact that you can’t get money out of someone who doesn’t have money. Unfortunately, this is weak ground to build your “don’t-sue-me-i-have-no-money” logic. You may not have money now but there is a high probability that you will have money or some other type of asset some time in the future. Thus, if the timeframe fits within the statute of limitations for a lawsuit, you can get sued for debt payment and you will end up paying that debt for years to come should you lose.

Debt Settlement Is An Option For Credit Card Holders

This one is partly true. Debt settlement is an option that is “available” to credit card holders. However, the availability of debt settlement to a credit card holder depends largely on the credit card company that the credit card holder owes. As a credit card holder, you have to keep in mind that you will always have to pay for what you owe – plus interest and fees if you’re not careful. However, there is a chance that you can get a debt settlement arrangement. This usually happens when your debt is about to get written off and your credit company is desperate to reclaim at least some of the amount that you owe them.