Credit card myths one should refrain from believing in 2025 | Mint

Credit cards offer flexibility and convenience at the same time. They are surrounded by several myths which can mislead consumers and ruin financial health.

As we undergo the landscape of digital finance, it is probably the right time to bust some of the myths around credit cards. 

Common credit card myths debunked

1. Carrying a balance improves your credit score: This is one of the most harmful credit card myths. Many people believe that keeping a balance on their card (and paying interest) helps build credit. In reality, paying your balance in full each month is what boosts your credit score. What matters most are your payment history and credit utilization rate—not whether you carry a balance.

Therefore, you should avoid interest charges by paying off your full statement balance every month. This shows lenders you’re responsible without costing you money.

2. Closing old cards helps your credit: It might seem like a good idea to close a credit card you’re not using, but doing so can hurt your score. This is because it can reduce your total available credit and shorten your credit history—both of which can lower your credit score.

Therefore, you can keep old cards open, especially if they have no annual fee. They contribute to your length of credit history and available credit.

3. You only need one credit card: Having one credit card is better than none but relying on just one limits your credit profile. It can also be risky if that card is ever compromised, frozen, or maxed out.

Diversifying your cards can improve your credit score and give you access to better rewards or backup options.

So, you may consider having 2 to 3 cards for different purposes. One could be for daily use, one for travel or rewards, and one with a low interest rate or high limit.

4. Credit cards lead to debt: Credit cards may lead to debt but only if it is misused. However, they are powerful financial tools when used wisely. Responsible users benefit from rewards, fraud protection, and interest-free borrowing (when paid off monthly).

Therefore, it is not the card but how you use it. Treat your credit card like a debit card: don’t spend what you can’t pay back.

5. Applying for a credit card can ruin your credit: While applying for a new card causes a temporary dip in your credit score, it will not ruin your credit especially if you have good credit to begin with. Over time, a new card can help your score by increasing your total available credit.

Therefore, apply for credit responsibly and space out your applications. One or two inquiries a year won’t hurt your score long-term.

6. Minimum payments are sufficient: By paying only the minimum payment, you can keep yourself in good standing. Some like to believe it, but it is a trap. You will end up paying more in interest over time, and it will take you a long time to clear even modest balances.

Therefore, always aim to pay more than the minimum to avoid interest and reduce debt faster.

7. Debit cards are better: It is a widely held perception that debit cards are safer because they are tied to your bank account. But if your debit card is compromised, you could lose direct access to your money.

Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

For all personal finance updates, visit here