19 Jul 7 Common Myths Regarding Credit Card Rewards

These days, fewer and fewer Americans are actually carrying cash with them when they are out doing things. One of the reasons for this is because of the convenience of credit cards and debit cards. Additionally, using credit cards can come with great rewards. There are many different kinds of credit cards available on the market. Each of them come with their own set of interest rates and reward programs. It can be difficult to know which card to go with. There are a lot of myths with what kind of rewards you can get using different cards. Below are some of the top common myths about rewards offered from credit card companies.

Applying For Credit Cards Can Hurt Your Score

Many people are afraid to even apply for credit cards because they are afraid to cause damage to their credit scores. The truth is, applying for a new credit card once here and there is not going to do enough damage to your credit score to really matter. Your score might always carry records of the amount of cards you have applied for. However, these records do not have enough impact on your credit report to hurt your chances of getting approved for a card that you want.

Credit Scores Improve After Canceling Your Unused Credit Cards

Another myth about credit cards is that you will see a rise in your credit score once you close an account for a card you are not using. However, is better for your credit score to leave unused credit cards on your account when not using them. One factor used when determining your score is how much of your total credit limit across all cards is being used. When you have cards with limits that are not being used up, it can work in your favor when it comes to your credit score.

Earn Rewards While Keeping Balances

One of the main benefits of having credit cards is the promise they give to earn rewards. What most people fail to realize, however, is that in order to take full advantage of these benefits you have to pay off your full balance each month. Unfortunately, many credit cards that offer great rewards make up for those rewards by charging high interest rates to their customers. They are not true rewards if you are paying more in interest than you are receiving.

Earning Miles And Points Are Not Worth It

Many people shy away from getting credit cards that offer rewards in the way of miles or points. They seem to think they are not really worth much. However, these types of cards can be very beneficial for people who are good about paying off their credit card balances each month before interest racks up on their accounts.

No Credit Cards With Sign-On Bonuses

Another false myth that many people are not aware of is about signing up for credit cards just for the initial bonuses. People will open a credit card account, enjoy the sign-on bonus and then get rid of it or stop using it. This can be good if you do it once in a while. However, like stated earlier, it can also have a negative impact on your credit score if you apply for too many cards in a short amount of time. If you find a card with an impressive bonus that is tempting, take it.

Improve Credit Score By Lowering Credit Limits

It can be both bad and good to have high credit card limits. While having a lot of available credit is good for your score, it can also be a temptation knowing you have that credit available to use whenever you want. However, before you go and use that credit to make a big purchase, remember that using your credit and maintaining higher balances will start to reduce your score in time.

Your Score Will Maintain Itself

Another myth that many people believe is that your credit score can take care of itself without much work on your end. The factors that go into building and keeping a good score are more than just paying off the balances of your credit cards each month. While there are many reasons to work towards a good credit score, your most important reason for having a good score is because it gives an overall look at your ability to be fiscally responsible. Even if you have never let a balance on a credit card you own carry over to another month, there are many other factors that need to be taken into consideration when determining your score.