credit card mythsWhen you think of credit cards, what comes to mind? Do you think of them as bad news or scams? We commonly see reader comments and questions grounded in myths. The thing is, many credit card myths are easy to dispel, but they could be hurting you and your financial health if they aren’t debunked. For this reason, we’re busting three common credit card myths that could be hurting your wallet.

Myth No. 1: Credit cards are bad news

Fact: Credit cards can provide many benefits and are important tools that can vastly improve your credit history, but you’ll have to make sure you’re using them responsibly.

Here’s the explanation: Credit cards sometimes get a bad rap, but the idea that “credit cards are bad news” is one of the big credit card myths that we need to get rid of. Credit cards can be extremely valuable tools, and they’re key to having excellent credit health. For one, by using your credit card responsibly, you’ll be able to build your credit history — something that you’ll want to have if you plan to widen your prospects and get approved for a loan, a mortgage and more.

Another benefit of having credit cards is that they give you opportunities to earn rewards and perks that benefit you. For example, if you want to earn cash back for spending, get miles for traveling or earn other rewards on purchases, a number of cards allow you to do just that. After all, if you need to spend money anyway, you might as well make sure that you’re spending your hard-earned cash in a wise way — like getting rewarded for your purchases.

Myth No. 2: Low APR cards are a scam

Fact: Low APR cards aren’t a scam. In fact, if you have a high balance on your current credit card, a low APR credit card could be the life saver you’re looking for.

Here’s the explanation: One of the most common credit card myths that we’ve repeatedly run into is the idea that low APR credit cards are scams. This is rather unfortunate, since low APR credit cards are extremely useful tools when it comes to certain situations. If you believe 0% intro APRs are a scam, you’re not alone, as one of our credit card experts used to believe that 0% intro APR cards were scams. In fact, it wasn’t until she was planning her wedding that she discovered just how valuable these cards can be.

When does it make sense to use a low APR card? You can use a card with a 0% intro APR on purchases to cover a big purchase you’re planning to make. For example, if you’re buying a couch and you need some extra time to pay the balance down, using a card with a long 0% intro APR will allow you to do exactly that. Additionally, cards with 0% intro APRs on balance transfers allow you to avoid rising interest rates by transfering the balance from your high-interest card to the low APR card. Balance transfers usually come with a balance transfer fee of 3% to 5% of the transfer, but this one-time fee is likely worth paying when you compare that one-time fee with your high interest rate.

The trick to getting the most from a low APR credit card is to pay off the balance before the 0% intro APR runs out, as doing so will ensure you won’t pay a dime of interest. If you’re unable to pay off the balance before the 0% intro APR expires, contrary to popular belief, you won’t be charged back-interest or pay any hidden fees.

Myth No. 3: Improve your credit scores by carrying a balance

Fact: Carrying a balance could negatively impact your credit scores.

Here’s the explanation: While some people may believe that carrying a small balance is one of the keys to building excellent credit, that simply isn’t true. In fact, carrying a balance, no matter the size of it, can hurt your credit scores — especially if you have less-than-perfect scores. Generally speaking, the higher your credit card debt is, the more your credit scores are dinged. That’s because high balances will impact your credit utilization score, or a comparison of your total credit limits (across all of the cards you own) to your total debt (across all of the cards you own). For example, if you only have one credit card with a $1,000 credit limit and a $200 balance, your credit utilization is 20%. Your credit utilization is a key part of the amounts owed aspect of your credit scores, which means a high utilization ratio (it’s recommended to have a ratio of 30% or less) will drag down your credit scores.

For this reason, carrying a balance to improve your credit scores is a myth that you definitely shouldn’t subscribe to and put into practice. Instead, avoid carrying a balance in the first place. To get rid of your balance, you can consider transferring your balance to a credit card with a low APR, making it easier for you to pay off your balance, as noted above.

Now that you know the truth behind these credit card myths, learn more about credit cards and what they can do for you. To get started, follow our credit card blog and visit our reviews of the best credit cards to find the perfect card for your needs and spending habits.