Credit card: Myths and FactsEstimated reading time: 5 minutes

Credit card: Myths and Facts

Posted on Wednesday, December 20th, 2017 | By IndusInd Bank

We all love credits, but there is one credit which has a slightly misplaced image– a credit card. People are often scared of credit cards, thanks to the myths associated with this financial aid always at our disposal. Festivals, emergencies, family functions, or vacations may mean large expenses for you. That is when the true utility of a credit card comes to fore.

A credit card is not only immensely helpful for unforeseen expenditures, but its associated benefits are also manifold, including reward points on each transaction that you make, cashbacks on certain purchases, specific discounts on availing services from some of the affiliated brands and stores, etc.

As we slowly embrace the cashless economy, owning a credit card will always be an advantage if you use it judiciously. So, we will clean-bowl all the myths you might have heard about credit cards so you can get one that suite you, today

1. Myth: Credit Card Hurts Credit Score.

Fact: Credit card can actually help improve your credit score.

You will be surprised to know this, but your credit card actually boosts your credit score. It can take you one step closer to a favorable response from the banks if you need a loan.

Your credit card can spoil your credit score only if you do not pay your bill on time. Credit scores are spoiled only in case your expenditure is more than your earning and you do not have any alternate means to amortize your debt. A credit card can come to your rescue for meeting your urgent needs.

2. Myth: Paying off minimum balance is good enough and won’t attract interest.

Fact: For interest-free credit, always pay the total amount due.

By paying the minimum amount due, you just avoid the overdue payment charges. But you will be charged interest on the amount due and you will lose the privilege of the grace period for all new transactions. This will also have a negative impact on your credit rating. Always pay the total amount due on your credit card.

3. Myth: I don’t need to sign at the back of my credit card.

Fact: Signature makes you an authorized owner of the credit card.

We often take some things for granted, like signing on the back of the credit card. Understand that this little thing can save you from a big problem in the future.

When the POS machine is installed at any outlet, the merchant and the bank undergo an agreement regarding the card usage. According to the agreement, the merchant is contractually bound to check the authenticity of the card used. However, this process is usually ignored by the merchant.

If you have signed your credit card and in case your card gets stolen, you are not liable to make any payment if the merchant fails to check the authenticity of the card. But if you have not signed the card, then you are at the mercy of the thief. So, without further ado, sign your card before you head out for shopping or eating out the next time.

4. Myth: My credit card cannot be compromised if the PIN and password are safe with me

Fact: Check the authenticity of the website before entering your PIN and/or password.

This is one of the issues where the credit card users are caught off-guard. The RBI has made it mandatory to use a PIN as a security feature in all cards. However, you can still use a card without your PIN while doing online transactions. Many websites do not ask for your credit card PIN.

So when you make any online purchase, ensure that the website is authentic. Your card details are vital, and if they get in the wrong hands, it can render you financially vulnerable. A small check like “https” in the URL of the website can save you from inconvenience later.

5. Myth: Too many credit cards hurt the credit score.

Fact: The number of credit cards has nothing to do with your credit score.

Customers prefer more than one credit card owing to the various benefits associated with different cards. For example, an airline mileage card is beneficial for a regular traveler,

while a cashback card is ideal for shopaholics. Such features of credit card add-on to your overall experience.

People often dissuade others to apply for more than one credit card believing it will land you in huge debts and a poor credit score. But this is not true. If you are using your credit cards judiciously and paying your bills on time, the number of cards does not affect your credit score.

6. Myth: It is impossible to duplicate my credit card.

Fact: Beware of fraudsters.

Every credit card has an EMV chip that holds your details. When you swipe your credit card at any POS terminal, it automatically accesses your data. Advent in technology has also led to smarter fraudsters. There are various machines that can clone your card in seconds. To avoid such situations, always use your card at a trusted merchant and genuine websites. Also, ensure that the card is swiped in front of you; never allow payments to be made in your absence.

7. Myth: Loyalty pays, so stay loyal to one credit card.

Fact: Choose a credit card basis your spend patterns

You should always look for options to maximize your financial benefits. You can change or upgrade your card depending on your requirement. Each card has its own features and benefits to match your need. Also, you can enjoy the joining bonus and other rewards, too.

We can confidently say that a credit card is a financial tool that helps you to manage your finances, especially accidental or nonplanned expenditures. We hope we have busted all the myths you might have heard about credit cards. So, say goodbye to your dilemma and apply for a credit card now.

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