Alexandra Harbushka By

How is your relationship with your Credit Card?


How is your relationship with your Credit Card? Do you know everything about your favorite plastic friend? Credit cards are a huge part of our everyday life. I mean, they make it easy for us to purchase our goodies. They are a tiny piece of plastic that can fit in our pocket and virtually go anywhere. In fact, if we didn’t have credit cards we would not be able to establish a strong financial footing or even do online shopping.  With that said, there are a lot of misinformation out there about this little piece of plastic that can completely destroy your financial future. Here are some credit card myths for you to understand, so your friendly FICO does not get crushed.

 

Myth # 1: Canceling an unused credit card is a good idea to help your credit score.

This sounds like a great idea. I mean, if you are not using that credit card why should you keep it open for the temptation. Well, closing your credit card can hurt your credit scores. In simple terms when you close your credit card you are lowering your total credit limit which raises your balance -to-credit ratios {the amount of debt you have revolving in relation to your credit limits}. The ideal goal is to keep your balances low so that it will keep your balance-to-credit ratios low.  A good reasons to close an unused line of credit would be if your credit cards have fees.

 

Myth # 2: Your credit card debt won’t impact your rewards.

With most credit card companies you will need to pay off your debt in order to take advantage of the reward programs. Something to look at is some companies will let you use your points to pay your bill, this can be helpful if you are short on cash.

 

Myth # 3: A no limit credit card means you can spend freely.

All credit cards have a limit, even if it is not stated. Make sure you are spending what you can afford to pay off monthly. A “no limit” card can get you into trouble and make it difficult to pay off when the 30 days is up.

 

Myth # 4: Applying for credit hurts your score.

Yes, applying for a credit card will lower your score but it is only about 5 points. Only apply if it is something that you are sure you want to be approved for. When shopping at department stores and they offer a discount if you open a credit card run the other way. The % discount sounds nice upfront, but it is another card that you have to manage.  However when you are applying for home loans or a car loan, the process is a bit different. Because when purchasing a new home or a new car it is expected of you to “shop” for the best rate or the best car  you are given a grace period. Once your credit is pulled your credit can be pulled multiple times without it affecting your score.

 

Myth # 5: Only having 1 credit card is a good idea.

The only time this is a good idea if you don’t trust yourself with your spending. Having multiple credit cards that are paid off or even not used will not hurt you. In fact, this can help with increasing your overall credit limit.

 

You want to pay your balance off monthly. When you carry debt on a revolving card, it does just that, it revolves and then interest is added to the balance. This is how your balance can begin to get out of control. If you cannot pay off your balance then at the very least pay your minimum. You do not want to have a late.

 

If you are looking at some ways to get your finances in order. Here is a list of some mobile apps that will do just that.

 

  1. Digit – It automatically saves money from your checking account.
  2. Goodbudget – It will let you set money aside. You can create envelopes for different expenses.
  3. Wally – It monitors weekly, daily, monthly spending. You can also use it as a log for your receipts.
  4. Spendee – This is great if you like graphs and charts. {This is a $2 app}

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Shop some favorite wallets:

  1. Marc Jacobs – Madison Open Face Wallet {on Sale} $133.00
  2. Kate Spade New York – Tavy Wallet $88.00
  3. Rebecca Minkoff – Ava Zip Studded Wallet $145

 

Alexandra Harbushka
Alexandra Harbushka
About me

I am an entrepreneur, a daughter, and a lover. My life passion is to help women discover the secrets to having all three of life’s essentials: sex, money, and food. I bring my international experience and corporate success together to help other women thrive as a Real World Woman.

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