Debunking 5 Common Myths About Credit Cards

Debunking 5 Common Myths About Credit Cards

Have you heard those around you saying “you only need one credit card” or “a card with an annual fee is expensive”? If you find yourself agreeing with any of these statements, you may be falling into the trap of common credit card misconceptions. 

When used responsibly, credit cards help manage your finances. In this article, we debunk 5 common myths about credit cards to show you how credit cards can be a useful part of your life! 

You only need one credit card to save. 

There is always the fear that applying for multiple cards can lead to debt. However, with responsible management of credit cards, having several options on hand can help you reap rewards from a variety of spending.  

Ever seen a wobbler at the cashier showing discounts for specific credit cards? Possessing more than 1 credit card allows you to whip out certain cards at the opportune moment to capture those perks! If you’re making a big-ticket purchase, the amount saved could be significant. 

Furthermore, having more credit cards means you have a wider range of credit card choices for different aspects of your lifestyle, such as for spending on dining, household and leisure. Having cards for different purposes makes sure that you are eligible for more rewards, regardless of your spend. 

Need help with picking a range of credit cards best-suited for your lifestyle? CardsPal’s Cashback Calculator makes it easier for you. Click on the brands that you often shop at and enter your average spend amount. 

The Cashback Calculator will recommend cards with the highest cashback, giving you a clearer idea of the cards that you may find useful. Also, compare credit cards side by side on CardsPal and get a comprehensive summary at 1 glance as shown below! 


Screenshot 2021 04 29 at 3.38.51 PM e1620638494100  CardsPal Cashback Calculator optimises your credit card spend
Photo via CardsPal 


It’s detrimental to get credit cards with annual fees 

Not always the case. Credit cards with no or low annual fees could be attractive if you want to reduce your credit card bills. However, you should not avoid certain credit cards just because they have higher annual fees. 

Often, credit cards with higher annual fees offer the best rewards and benefits such as free hotel stays and cashback of up to 10% on spends. In the long-term, you might be able to offset high annual fees with rewards and travel perks, making the fee well worth it.  

Of course, there are also credit cards with annual fee waivers that offer stellar rewards. For more information, click here to see CardsPal’s breakdown of best credit cards with no annual fees. 


Unused credit cards won’t affect my credit score. 

False. According to Credit Bureau Singapore, a credit score is an indicator of how likely an individual is to repay his debts and the probability of going into default. When you apply for a new credit card, your credit score will be impacted whether you start using the credit card or not.  

According to Investopedia, applications for new credit cards make up about 10% of a consumer’s overall credit score. Therefore, display caution when applying for new credit cards as this can negatively impact your credit score if done too frequently.  

Click here to learn more about top credit card mistakes that lower your credit score.  

       Credit Scores

Credit Scores
Photo via Prosperopedia  


Making the minimum monthly payment is enough. 

Not true. The minimum monthly payment is an amount set by credit card issuers, making up about 5% of your outstanding balance. However, this minimum amount is not enough as the total current balance is the actual payment you owe.  

Making only the minimum monthly payment is one of the key drivers leading to credit card debt. This is because credit card interest rates apply to any outstanding balance left at the end of each billing cycle. Therefore, paying more than the minimum amount due could help to reduce interest payment and prevent credit card debt.  


Screenshot 2021 04 29 at 3.39.43 PMCalculation of credit card payments
Photo via
Above image is for illustration purposes only


A high credit card limit is always a bad thing.  

Many tend to lower their credit card limit in case their inner shopaholic gets out of control. However, having a higher credit card limit can confer several advantages including greater flexibility to make larger purchases as well as money for emergencies.  

Furthermore, 30% of your credit score is based on your debt-to-credit ratio which is the amount you owe in proportion to your total credit limit. Therefore, if you keep your balances low and have a high credit card limit, your debt-to-credit ratio will also be low, improving your credit score. You can increase your credit limit by applying for a credit card with a higher credit limit, making early payments and maintaining a good credit score.  

That said, be wary of incurring debt and high-interest payments that may come with a higher credit card limit! 

Don’t let misconceptions prevent you from making the best decisions and maximising your returns on your credit cards. We hope that these clarifications make you more aware of common myths of credit cards and how to go around them! And if you are unsure of which cards to use for different types of spending, use the CardsPal app to get the best recommendations of credit cards to use for your day out! 


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This article is contributed by CardsPal

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