Before, Singaporeans were hesitant to use plastic cards for purchase. Unfortunately, they worry about credit cards for the wrong reasons.

We all know credit cards have their benefits and downsides.

However, if you just keep on scaring yourself with common misconceptions. These have been deeply rooted in society. You will fail to maximise and enjoy its use.

Arm yourself with enough knowledge and not worry about credit cards. You will be surprised how much you have been missing out on. In addition, too many doubts and wrong beliefs hinder you from immense benefits. 

20 Common Worry About Credit Cards And Myths

Here is the common misconception which makes you worry about credit cards.

I can’t afford the interest rates.

Yes, the interest rates can range from 22 to 25% per annum. But, you won’t be charged any interest rate as long as you pay your dues on time. Also, you can avoid the compounding interest rates. Just make sure that you can pay your credit card bills diligently.

A credit card puts me in debt.

A credit card is a short term personal loan you get from banks. Every swipe means your bank is paying for the purchase you made. Afterwards, you are given enough time to pay for it on or before its due date.

You have control over how much your bill is. Why? Because you are the one shopping. Never swipe for things you can’t afford to pay in cash. You won’t be in debt if you can control your shopping impulse.

The debit card has the same use and benefit.

Many people believe that debit cards and credit cards are of the same use and benefit. They thought it was about cashless payments. However, they are wrong. Every time you use a debit card, it will deduct the charged amount from your savings in the bank. It means that you use the money you already have.

On the other hand, when you swipe your credit card, you get a short-term loan. The bank gives you several days to settle the bill.  Unlike credit cards, debit cards do not offer rewards, free Miles, and cashback.

I know people who ended up buried in debt.

There are various reasons why people end up in debt. For example, some credit card holders swipe beyond their capacity to pay. Meanwhile, others fail to settle their bills on time, which results in late interest rates. Also, some Singaporeans use the credit card cash advance without knowing its risks.

Reading the card’s terms and conditions is best before signing up.

The debit card is safer.

We usually hear people being scammed through their credit card details. However, this is just the same with debit cards. It depends on how you keep your information secured. 

There are hidden charges.

Credit cards indeed have various charges. These are late payment fees, administration fees, annual fees and interest rates. Nevertheless, you have the chance to see them all in terms and conditions. The card issuer provided it for you to read carefully and sign afterwards.

However, most Singaporeans do not even bother reading the fine prints. Instead, they get too excited to use the new card. Therefore, they end up scratching their heads over the outstanding balance.

Credit cards will make me spend more.

Credit cards let you shop around online and in brick-and-mortar shops even without cash at hand. So it is tempting to purchase everything you want. But remember that these items are not gifts from Daddy Long Legs. You still have to pay for the purchases at a later date (bill’s due date).

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Credit cards are all the same.

Credit cards are all plastic cards that bare the holder’s name and a series of numbers. But they are all different regarding rewards, cash backs and free miles. So take time to understand their purpose. Some credit cards are great for dining. Others are handy for petrol refills. In comparison, some are great for usual flyers.

I need to open a new bank account.

People worry about credit cards and opening a bank account. However, it is not always the case. It is enough to have just one bank account. But, you can pay for several credit cards for your convenience.

I will forget to pay the bills.

Use General Interbank Recurring Order (GIRO) to pay your bills on time automatically. GIRO Arrangements allow your bank to pay recurring bills charged by another organisation or merchant. You just have to make sure that your bank account has sufficient funds.

I will have a better credit score if I close my old credit card accounts

Closing several long-time credit card accounts can hurt your credit score. If you worry about credit cards, it is best not to close them all. Keep at least one or two open. Also, use it sparingly and pay on time. It helps to keep your credit score in shape.

Missing one payment is okay.

Credit card issuers are not as forgiving as you think.

When you miss paying your bill on time, there is an automatic interest rate charge and late payment fee. With the compounding interest rate, you will have a charge each day based on the current balance. Furthermore, the computation is on the amount you charged until you settle the bill.

Opening several new credit cards in a short time does not matter.

Opening a credit card with a few months in between may not affect your credit score. But if you apply for several credit cards in a short period of time, it will be very noticeable. Keep in mind that banks will be pulling your credit reports from the credit bureau. In addition, every credit history inquiry will be in your record. Plus, too much inquiry will pull down your credit score.

It’s okay to reach my credit limit. I am not spending over the limit anyway.

Though you have a credit limit, it is better not to reach that amount. It ensures you pay your bills with ease.

Furthermore, when you get into an emergency, your credit card will not be helpful anymore. Or worse, you might spend over the limit.

I should not accept any credit limit increase.

It is fine to have a credit limit increase. The lesser you use in your credit limit, the better. Plus, it will reflect in your credit score. Thus, a healthy way to improve it.

I just need one credit card.

Having one credit card may work for those who easily get tempted with a shopping spree. But if you are a responsible payer, a couple of credit cards can work to your best advantage. You can enjoy rewards, cash backs, free Miles and more.

Paying the required minimum amount will save my credit score

As long as you don’t settle the whole amount of the bill, it will be hurting your credit score. Aside from that, there is a charge of late payment charge. That’s why it is best to pay the right due. It lessens the worry about credit cards.

Cashback means getting paid for shopping.

You may enjoy cashback as many credit cards have been proud of this benefit. However, you have to remember two things.

• You need to spend a minimum amount to be qualified for cash backs.
• Also, most credit cards have the maximum amount of cashback you can claim.

It is hard to ask for a change in credit limit.

You can ask for a higher credit limit. But it depends on your credit score. If it is outstanding, it means you are a responsible payer. However, be mindful of your spending. It helps avoid the worry about credit cards. 

Employers never check my credit reports.

When paying your credit card bills, you should be mindful. It can significantly impact your credit score. If you hurt your credit score, it may negatively affect your employer. It is either you work in a financial organisation or your position involves handling the company’s finances.

If you need cash for immediate expenses without using a credit card, you can get a loan from Cash Mart today. It is the best alternative when you still worry about credit cards.