Americans have a love affair with credit cards. There are roughly 570 million credit card accounts in the country – equal to about two cards for every adult. However, despite this widespread prevalence, many Americans still believe one or more credit card myths. As a result, these people may be harming their credit scores, paying unnecessary fees or otherwise hindering their financial potential. Here is the truth behind six common credit card myths that can help you become a smarter credit user.

Myth 1: You need great credit scores and a high income to get approved for a credit card.

It’s true that the credit cards with the most generous rewards and the most favorable terms often have strict requirements to qualify. However, there are credit card options available for virtually everyone. Products such as secured credit cards and student credit cards may require no credit score or income at all. These entry-level cards offer a great way for people to begin building credit so they can qualify for better cards, mortgages and other financial services in the future.

Myth 2: Carrying a credit card balance helps improve your credit scores.

It’s a common myth that a credit card user can improve their credit scores by carrying a balance, which means not paying off a card’s statement balance in full each month. In reality, there’s generally no benefit to your credit scores from carrying a credit card balance. Instead, following this practice is likely to cost you needless interest charges on your unpaid balance. Most financial experts recommend paying off your statement balances in full each month if you can.

Myth 3: Using a credit card always comes with fees.

With all the headlines about credit card debt and fees, some people assume that using a credit card must always come with a cost. However, if you choose a card with no annual fee, pay off your statement balance in full every month and avoid other actions that result in fees (such as cash advances), you can generally use your credit card without paying a single cent in fees.

Myth 4: Having multiple credit cards hurts your credit scores.

While applying for a new credit card does temporarily ding your credit scores, there’s no long-term penalty to having multiple credit card accounts. In fact, having a higher number of credit or loan accounts is generally considered a positive for your credit scores. Maintaining multiple credit cards may also allow you to mix and match the rewards and terms that suit your needs.

Myth 5: Paying only the minimum payment is enough.

It’s true that you’re only required to make the minimum payment on a credit card each month. However, not paying off your statement balance in full means you will typically be charged your card’s interest rate on the balance you’re carrying. With average credit card rates above 20%, this can lead to expensive finance charges and a growing balance of debt that can become a burden. For this reason, as previously mentioned, most finance experts recommend paying off your credit card statement balances in full each month.

Myth 6: You should always cancel a credit card you don’t use

Getting rid of something that sees no use usually makes sense, but that’s not always true with credit cards. Generally, the longer your credit accounts have been open, the more they benefit your credit scores. When you cancel a credit card, that history usually drops off your credit report after 10 years. Therefore, canceling one of your oldest cards could eventually do some harm to your score. Closing an unused card may be worthwhile if it has an annual fee, but otherwise, it may be better to keep the card and use it at least once a year to prevent it from being cancelled by the card issuer.


Credit cards can be a benefit or a burden. Use one way, they can provide convenience, security and rewards. Used another way, they can lead to fees, debt and stress. By learning the truth behind these credit card myths, you should be better prepared to make wise use of credit.

If you own your home and have substantial credit card or other high-interest debt, you may be able to take equity out of your home to consolidate your debt and save on interest fees. To learn more about this option, get in touch for a free mortgage consultation.

Draper and Kramer Mortgage Corp. and its employees do not provide credit advice. This material has been prepared for general informational purposes only and is not intended to provide and should not be relied on for such advice. Do not act or refrain from acting on the basis of this material without first consulting a qualified professional for advice.