Here are the final five of the TMM Top 20 Dumb Credit Rumors.
16. “I cannot go over my credit limit because I get denied, so I am fine.”
Statements like this make me wonder how many credit cards the person has… and how many of them are at or near their limit. If you are denied when you go to make a purchase because you are maxed out (or close to it) you are not fine. Unless you pay off the total balance at the end of the month, the interest rate you are charged will put you over your credit limit. And thus ensue the “over-limit” fees, higher interest rates and dings on your credit report. You should never get to this point because (as previously mentioned in #7) you should keep your balance below 30% of your credit limit at all times!
17. “My credit card gives me free stuff (ex: air miles, iPods, etc).”
Yes, this is a rumor. That “free” stuff, like your “free” flights and so on… are far from free. Actually, for the amount of money that you have to spend to accumulate enough points to get that “free” stuff, you would be better off going and buying that “free” item yourself. Who rationalizes spending $15,000 before getting a “free” plane ticket? Sure, it may work for business owners, but rarely for personal credit card users. A smarter move would be cash back. Check out your options.
18. “Cash advance is the same as using an ATM.”
Actually, any cash advances that you take will probably account for the highest interest rate that you will pay on your credit card. This is versus simply going to the ATM and taking out money from your bank account, with no interest charges. Go the extra mile and find your banks ATM. You would pay less in gas then in interest on your credit card.
19. “Credit cards = free money!”
What?! Nothing is ever free! Always remember that. When I heard this for the first time, I had to have them repeat what they said. Then I just stood there and was waiting for the joke. But they were serious. Needless to say, it never occurred to them that if credit cards were indeed free money, then how did credit card companies become so rich?
20. …Got a better dumb credit card rumor? Share the laughs and post it!
~K
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It is free money. I get cash back and I am not paying any more than I’d usually pay. Plus, I checked my credit report this past month and I didn’t notice the overlimit “ding”. I had overcharged a few years ago. Damn same color card!
Here’s another tip. DO NOT get a Capital One or American Express card if you are worried about your credit score. These companies do not report your credit limit to the credit bureaus. When calculating your score they use your highest balance as the limit. Even if you keep a low balance, it appears on your credit report like you are using a high percentage of availiable credit and really drops your score.
On top of that Capital One has terrible customer service. It recently made the list on msn of worst customer service. Once I made a payment over the phone and the rep. typed in one number of my debit card wrong. By the time I received my statement the next month they had already reported me as past due and I spent years getting it corrected. I now have a 780 credit score because I make sure the keep up on all the credit reporting changes.
Don’t believe the hype Capital & MBNA are another name for criminals. Whatever they (Capital One) convinces you to believe, once you fall behind there is little hope for redemption. The fees they waive even for an illness are usually the smallest ones, while things like the over the limit fee are charged over and over again. Another trap is the credit insurance,making a claim is so inconvient that the average person does not have time for the run around.
Just reading the comments, I have a Bank Of America credit card, I always thought Capital 1 was good but I see not. What is the best type of credit card to get???
CREDIT CARDS ARE LIKE SEX IN A MARRIAGE, AT FIRST ITS WONDERFUL, BEAUTIFUL, LATER IT BECOMES A HEADACHE. CHECKING YOUR CREDIT SCORE IS ALSO A SCAM PEOPLE, EVERYTIME YOU VIEW IT, YOUR SCORE GETS DINGED! I NOTICED NO ONE MENTIONED THAT!
JUST HAVE YOUR CARD COMPANIES CALL YOU WHEN THEY SEE SOMETHING OUT OF THE ORDINARY, THEY DO THIS FOR ME, MASTERCARD AND VISA! NOTHING IS FREE!!!!!!!!
IF YOU HAVEN’T NOTICED, WHY ARE THERE SO MANY ADS ABOUT “CHECK YOUR CREDIT SCORE ON THE INTERNET”????????????
I don’t see much talk about interest free credit cards. I get one and use it for the 12 or 16 months free interest then pay it off and cancel it. Then I just apply for a new one and do it again for another 12 or 16 months. Been doing this for many years and never paid a $ in interest. I am not rich, just a blue collar fireman. I still maintain a good credit score!
The Pirate is mistaken!!!!! You DON’T get dinged for checking your credit score when checking your own credit score it only hurts you when a bank or someone is checking your score to give you a loan. Pirate is correct that a lot of these advertisements are from companies that are trying to scam you. Here is a warning from the Federal Trade Commission:
Important information from the Federal Trade Commission, the nation’s consumer protection agency: annualcreditreport.com is the ONLY authorized online source for you to get a free credit report under federal law. You can get a free report from each of the three national credit reporting companies every 12 months. Some other sites claim to offer “free” credit reports, but may charge you for another product if you accept a “free” report.
[...] read all of the posts in the Twenties Money series about credit card myths, click here, here, here, here and [...]