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10 MYTHS ABOUT CREDIT CARD DEBT

1. Making regular monthly payments on time leads to a good credit score.  Actually, even if you are making your minimum monthly payments, if your debt-to-income ratio is greater than 30%, it will reflect negatively on your credit score and lower your credit rating.  If you want to improve your credit score, you must get rid of some of your debt so that it occupies a smaller percentage of your income.  
2. The more available credit you have, the better your rating will be.  Credit card companies want you to be in debt because it maximizes their profits.  It is beneficial to the credit card companies, and not necessarily to you, for you to have lots of credit available to you.  They make the most money when they can get you to open lots of accounts and pay only the minimums on each one.  This, however, will keep you in debt for years.
3. Credit is there to help you out and make your life better.  Actually, credit is incredibly expensive.  You pay for things many times over because of the interest you are charged.  You lose all the money you could have earned by investing the money that instead went to pay off your credit card debt.  Credit is useful for things like buying a house, but beyond that, it is cheaper and more efficient to pay with cash. 
4. You need a large income to be wealthy.  In reality, all you have to do is make smart financial decisions and stay out of debt.  If you invest the money that you are saving from not having to pay interest on credit cards, you will earn hundreds of thousands of dollars in your lifetime. 
5. Closing accounts will improve your credit score.  Wrong!  After you have opened a new account, the damage is already done.  Closing accounts may actually harm your score by increasing the ratio of used credit to available credit.  It will also make your credit rating look younger and less stable if you close old accounts.  To improve your credit, pay your bills in full and on time, correct any errors on your report, pay off any remaining debt, and apply for credit sparingly. 
6. If you don’t use credit, you’ll never be able to buy anything.  On the contrary, you can save your money and pay for things with cash.  This way, you save money on interest and stay out of debt. 
7. The credit card companies wouldn’t send me credit applications if I couldn’t afford it.  Credit card companies want you to be in debt.  In most cases, they don’t care whether you can afford it or not.  They probably got your information from a mailing list; they didn’t send you the offer because they really thought it would be good for you.  You need to decide what credit you can afford.
8. If you pay a small amount by the due date, it will be counted as a full payment.  Only a full payment counts as a full payment.  If you do not make at least your monthly minimum payment, the credit card company could attach late fees and charges that will only increase your debt.
9. If you have a good reason for not paying your bill on time, it will be overlooked.  If you have a serious problem that prevents you from being able to make a payment, contact your creditor immediately.  They may give you a grace period or set up a payment plan, but never assume that such an agreement is automatic.
10. Credit card offers hurt your credit score.  Just receiving offers in the mail does not affect your credit score.  Only when you respond to the offers and apply for an account is your credit score changed, so be cautious in the offers you respond to.