Contrary to the popular belief that credit cards ruin your financial health, they can actually help you save money. Just like that there are many false assumptions people have about plastic money.
We’ve highlighted some of the most crazy things people have to say about credit cards:
Myth #1: Signatures aren’t that important:
When you sign the back of your card, you’re implying that you’re the owner. The idea is that if someone were to steal the card, they wouldn’t be able to duplicate your signature on the pay slip. On most cards you’ll find, “Not valid unless signed” below the signature box. Its really important to sign your credit card because it prevents someone from misusing your card or stealing it.
Myth #2: Too many credit cards harm your credit score:
Before banks give you loans or credit cards they check your credit score. A credit score is nothing but a score assigned to you based on your ability to pay up your debt. Higher the credit score means your ability to pay up all your loans and credit card bills is good, and lower the credit score means you are a risky client for the bank. A high credit score make your loan terms less strict than someone with a lower credit score.
People often think more credit cards are bad for your credit score. But that’s not true as long as you pay all your bills on time your credit score will be fine.
Myth #3: If no one knows your CVV number your card is safe AF:
Few websites don’t really need your CVV number for transactions. Nor is it set in stone that they have to ask for it. So, by simply entering your card number, the expiry date and your name your payments will go through successfully.
Myth #4: Credit cards cannot be duplicated:
A magnetic strip-based credit card stores a lot of data on the magnetic strip. When your card is swiped, the data is extracted for verification purposes. It is possible to clone your card using this data and make a duplicate card, thus putting your card at risk. EMV (Europay, Mastercard and Visa) chip based cards are more secure in this respect and banks are now issuing these cards.
Myth #5: PIN and passwords keep your card safe.
This is another myth related to credit cards. Online transactions made on Indian websites require you to put a secure PIN as the final authentication to the transaction after you put your name, card number and CVV number. However, transactions on international websites do not make this additional layer of safety mandatory. As a result, if someone knows all the details of your card other than the secure PIN, they can still use it on international websites.
Myth #6: Your reward points will not be affected if you make late payments
Missing a credit card payment is a bigger deal than you might think. Your credit card company won’t show up at your door after you miss a payment, but they’re definitely taking action behind the scenes. If there is a late payment the company temporarily takes away your reward points. If the payment isn’t made for more than 60 days the reward points are taken away.
Myth #7. Credit cards are not good for your financial health
Everyone avoids credit cards because they believe that increases their debt. This is only true for those who lack financial discipline and can’t control their impulsive spendings.
In fact, credit cards are good, here’s how: When you make payments through credit cards it is like taking loans, they help build credit histories for those who have never availed loans. When you build a credit history and pay it on time it improves your credit score. Secondly, credit cards are interest free for up to 50 days. Lastly, they have discounts, cashback offers and reward points that can help you save money.
If you’ve heard any more of these crazy things, comment to let us know.