Personal finance "experts" are a dime a dozen these days. Simply mentioning something like credit cards will generally cause people to jump at the chance to educate you with their very best advice.
So as you might imagine, kids today are hearing a lot of advice about credit cards - from parents, teachers, schoolmates, commercials...the list goes on. So what credit card myths have your children probably been taught already?
Here are four you should make sure your kids never learn:
1. A high credit score means your finances are great; a low credit score means everything is falling apart.
Credit scores don't measure things such as income, assets, or wealth. A credit score's primary purpose is to inform lenders and banks what your credit history is like. So a low credit score isn't necessarily indicative of poor finances and low income, although it still doesn't look good to potential creditors.
2. Your VIP/Black/Gold/Executive credit card doesn't have a balance - there's no danger of overspending!
Truth be told, every credit card has a spending limit. Non-disclosure credit cards that have some kind of identifiable insignia (or words like "VIP Gold" and "The Black Card") are misleading in the sense that they make consumers think there's no limit to their spending. One of the most common ways consumers actually decrease their credit scores is when they "accidentally" hit that credit limit on their "executive" card.
Don't believe the hype - banks don't truly offer "no-limit" credit cards.
3. Checking your credit score will decrease it!
Absolutely not true.
There's not much to talk about here - this myth simply isn't true. Imagine losing a few bucks every time you checked your checking account balance. Not true!
Few people ever actually check their credit score, but if you're someone who's curious as to how you stand, feel free to check without worry. You might have to pay a couple bucks to get the results, but your credit score won't change because of it.
4. You only need to pay the monthly minimum in order to have good credit scores.
This is definitely one of the most commons credit card myths. Consumers often believe that paying the minimum balance will leave them in the good graces of creditors and lenders. And while credit card companies do make a large percentage of their profits from the interest rates they charge consumers who carry balances, revolving credit card debt does absolutely nothing to improve your credit scores.
