Social Icons

Pages

quarta-feira, março 30, 2016

Don’t Believe These 5 Credit Card Lies

Flickr Lifehack

No matter where you turn, someone’s giving advice about credit cards — bankers, bloggers, credit counselors, frequent flyers, and more. The problem is, much of it is either contradictory or self-serving.

We’re here to separate fact from fiction.

Lie 1: You Shouldn’t Cancel Credit Cards

If you call up your credit card company and tell them you want to cancel your credit card, here’s what they tell you, “Sir, you might want to reconsider as cancelling your credit card could have a negative impact on your credit score.”

Well, isn’t that convenient? The truth is, if you have a credit card with an annual fee and you’re not getting any value from it, you should cancel it. If you have trouble with self-control and you want to get rid of your credit cards, cancel them all — if you don’t carry a balance, it will have zero impact on your score.

The only time you should think twice is if you carry a balance, then cancelling your credit card may increase your credit utilization by over 30%. But even if it does, if you’re going to pay your balance down in the short term, it won’t have a huge impact on your score.

Lie 2: You Lose Your Credit History When You Cancel A Credit Card

Again, your bank is all too willing to feed this myth. Why should you lose your history of payments if you cancel a credit card? Just think of the inverse. If you charge-off a credit card (never pay the bill), the credit card company closes your account. However, you can’t shake that thing for 7 years! If you close a good account, it can stay on your credit history as long as 10 years — so there’s no need to worry. Whether your account was closed voluntarily or involuntarily, its history will stay on your credit for years to come.

Lie 3: You Shouldn’t Have Too Many Credit Cards

Says who? The nervous ninny who proselytizes that we should all cut up our cards and put them in the freezer. For those among us who are responsible enough, there is tons of value in churning through welcome bonus offers. One person even has 1,497 credit cards! Your credit score will not be affected in the slightest by having more than one credit card. The only thing you will want to do is space your credit card applications out a little — bunching up your applications can temporarily decrease your score.

Lie 4: You Need To Carry A Balance To Get A Good Credit Score

What’s that? You need to be in debt to have a good credit score? No, you don’t. If you use your credit card and pay down 100% of the balance every month, your credit score will increase just as much as if you were to keep a little balance. The reason? Even though you’re paying down your balance every month, the bank is still lending you money from the time you made your purchase to the time you paid the bank back. As a result, you’ve proven yourself credit-worthy in the eyes of the bank.

Lie 5: Loyalty Pays

No it doesn’t. In the credit card game, loyalty never pays. How many times has your existing credit card company offered you an annual fee waiver and a free return flight to anywhere in North America? Only once — when you first got the card. We never get a retention bonus as big as a new customer bonus. It just never happens. The lesson is to keep getting new cards so you can take advantage of the biggest credit card bonuses out there. Don’t be a sucker, there’s a reason why the guy with 1,497 credit cards has so many cards and been to 10 times the number of places you’ve been to.

Featured photo credit: Credit Cards – Sean MacEntee via flickr.com

The post Don’t Believe These 5 Credit Card Lies appeared first on Lifehack.



from Lifehack http://ift.tt/25xGXig

Post Relacionados



Nenhum comentário:

 
Blogger Templates