3 Myths About Credit Cards: Why You Should Buy With Credit Not Cash

Credit Card, Debit Cards, Cash and MythsWe all know that person or have that family member that believes using cash or hiding it under the mattress is the key to staying financially safe during turbulent times or to protect one’s self from ‘credit crunches.’ However, the myths of credit cards are often conveyed as facts. In our minds we can rationalize anything or make up reasons to do / or not to do something, but where do these ideas come from? Many come from hearsay or the court of public opinion. Let us dispel some of the main myths of credit cards and how it all relates to how credit cards can help build or rebuild credit.

  1. Credit Cards lead to debt and bankruptcy.
    Credit Cards are the gateway drug to other financial ruin. This is a myth but a reasonable concern for most consumers. Credit cards are only as ‘responsible’ as the individuals that wield them. Your credit is attached to your credit card – this is the only big difference between credit cards and cash. But that difference can be a bonus when used to YOUR advantage. Cash does not offer protection, theft insurance, rewards, and in some cases ease of buyer’s remorse. Many credit cards make the process of returns or exchanges easier than when cash is used.
  2. Debit Cards and Credit Cards both impact your credit scores.
    Unfortunately, this too is a myth. Credit cards are a reflection of credit worthiness because they represent an organization ‘extending’ a borrower a line of credit. You can view credit cards as representations of how much a credit card agency is willing to pay out based on your financial experience. Debit cards are proprietary services linked to accounts with existing funds. With a debit card, you may have a credit agencies name, but it is more representative of the relationship the agency has with your bank, not you.
  3. There is no such thing as ‘fixed interest.’
    Most credit card agencies offer a variety of services, plans and agreements. In each of these credit solutions, there are terms and conditions that outline the cost of credit. In the relationship between a lender and the borrower the terms and agreement are the legal conditions of the credit being extended to the borrower. For some card holders, there really is a fixed interest, for a period of time. For some, the fixed interest is for a short, long, or extended period of time. Each case is unique.In some instances, card holders are able to have an introductory interest rate that is significantly lower than the normal or standard APR. These introductory rates usually last for a short period of time (60 to 120 days from approval) but are considered fixed! What typically happens is that new account holders don’t pay attention to the time frames or don’t read through the terms and conditions.

Obviously there are thousands of other myths, theories, and ideas surrounding credit cards – but for most, these are the most important. Remember, your credit is only as good as who’s managing it. that’s you! If you are committed to improving your life and your credit, take the time to educate yourself and find the card that’s right for you.

Credit cards shouldn’t be your enemy, but your ally. Credit cards can help you improve your credit, offer a number of valuable rewards, and can help you protect yourself from fraud. Not to mention it is hard to replace misplaced cash, there is no 1-800 number to help you find it once it’s gone. Money is money in any form, why not take the form that offers the greatest protections while helping you make a positive impact on your financial future?

About Kevin Williams

Kevin works as a independent consultant, helping people improve their financial situations. The author has a BS and Masters along with years of experience with credit cards, techniques for improving individual credit and life.

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