Do you carry a small balance on your credit card because you believe it’ll boost your credit score? But in reality, you’re paying interest and nudging your utilization higher, all for nothing. Or did you close an old card thinking it’ll clean up your credit report, only to shrink your available credit and knock your score backward. These are misconceptions about credit cards and the cost of believing them can be very real. 

Credit cards are among the most misunderstood financial tools out there. They can be a convenient lifeline or a dangerous trap depending on how they’re used. Unfortunately, a lot of what people think they know about credit cards isn’t quite true. Somewhere between advice from friends, outdated financial “rules,” and internet hearsay, a web of myths has grown around how credit cards actually affect your financial health. 

And these myths aren’t harmless, they cost you money, damage your credit score, and even sabotage your chances at better interest rates or loans later on. Let’s walk through the biggest myths around credit cards, explain the actual mechanisms at play, and point you toward smarter decisions. 

Myth 1. Carrying a Small Balance Improves Your Credit Score 

This one refuses to die, even though it’s flat-out wrong. Many people believe that carrying a small balance month to month helps boost their credit score. The truth? It doesn’t. In fact, it can do the opposite. 

Credit scoring models, such as FICO and VantageScore, don’t reward you for paying interest. They reward you for managing debt responsibly  and that means paying off your balance on time and in full every month. 

The key metric here is credit utilization, the percentage of your available credit that you’re currently using. Experts typically recommend keeping it below 30% (and ideally under 10%) to signal that you can use credit without depending on it. Carrying a balance just means you’re paying interest unnecessarily. 

According to Experian, there’s zero scoring benefit to leaving a balance. Paying your full statement balance before the due date shows lenders you’re financially disciplined  and that’s what truly strengthens your credit profile. 

Myth 2. Closing Old Credit Cards Boosts Your Score 

It might seem logical to close an old card you no longer use, especially if you’re trying to simplify your finances. But in most cases, this move hurts rather than helps your credit. 

Here’s why: closing a credit card affects two key components of your credit score; your credit utilization ratio and the length of your credit history. 

When you close an account, your total available credit decreases, which can drive up your utilization ratio. For example, if you have $10,000 in total credit limits and owe $3,000, you’re using 30% of your credit. If you close a card with a $2,000 limit, that utilization jumps to 37.5%, not great. 

Additionally, older accounts help establish the age of your credit history, another factor in scoring models. The longer your average account age, the better. That’s why keeping old accounts open  even if unused can work in your favor. 

If an unused card has no annual fee, there’s rarely a reason to close it. Instead, you can use it occasionally for small purchases to keep it active. 

Myth 3. Checking Your Credit Score Hurts It 

This myth probably comes from confusion between “soft” and “hard” inquiries. A soft inquiry occurs when you check your own score or when a lender pre-approves you for an offer, these have no impact on your credit. A hard inquiry, on the other hand, happens when you apply for new credit, such as a loan or another card, and it causes a small dip, it’s temporary. 

Monitoring your own credit regularly through apps or free credit reporting tools doesn’t harm your score at all. In fact, it’s one of the smartest things you can do to protect yourself from errors or fraud. 

The Consumer Financial Protection Bureau (CFPB) recommends reviewing your credit reports at least once a year through AnnualCreditReport.com, the only federally authorized site offering free access to reports from all three major bureaus. 

Myth 4. Applying for Multiple Cards Destroys Your Credit 

While applying for several credit cards in a short time frame can temporarily lower your score, the impact is typically small (around five points per hard inquiry) and fades within a few months. 

What matters more is why you’re applying. If you’re chasing welcome bonuses or trying to increase your overall credit limit responsibly, that’s one thing. But applying for multiple cards out of desperation (for example, to pay off debt) can signal risk to lenders. Over the long term, responsible use of multiple cards can actually help your score by increasing your total available credit and lowering utilization. The key is to space out applications and manage each account responsibly. 

Myth 5. Minimum Payments Are Enough 

Paying only the minimum keeps your account current, but it’s one of the most expensive mistakes you can make. Credit card interest rates have climbed sharply in recent years — the U.S. average APR is now over 21%, according to Federal Reserve data. 

When you pay just the minimum, most of your payment goes toward interest, not the principal. A $5,000 balance at 21% APR could take over 15 years to pay off if you stick to minimum payments and cost you thousands in interest. 

If you’re struggling to pay more than the minimum, consider setting up automatic payments for at least a fixed amount above it. Even a small increase can dramatically cut down repayment time and total interest paid. 

Myth 6. Debit Cards Build Credit Like Credit Cards 

This one sounds reasonable both are plastic, both connect to your bank, so why wouldn’t they affect your credit? But debit card activity isn’t reported to credit bureaus. 

Credit cards build credit because they’re loans. When you borrow money and pay it back responsibly, you demonstrate creditworthiness. Debit cards simply draw from funds you already have there’s no borrowing involved, so there’s nothing to report. 

If you’re trying to build credit but prefer to avoid the risks of traditional cards, consider using a secured credit card or a credit-builder loan. These tools report your payments to credit bureaus and can help establish a strong credit foundation over time. 

Myth 7. You Should Avoid Credit Cards Altogether 

This myth stems from fear often justified by horror stories of debt and mismanagement. But when used strategically, credit cards are powerful financial tools. They offer fraud protection, rewards programs, travel perks, and an easy way to build credit history. 

Avoiding them entirely can actually put you at a disadvantage. Without a credit history, you may struggle to qualify for mortgages, car loans, or even rental applications. 

The key is discipline, not avoidance. Pay balances in full, keep utilization low, and use cards for planned purchases rather than impulse spending. That’s how responsible credit use strengthens your financial standing. 

Myth 8. “If I make a large income, my credit score will automatically be high” 

Income and credit are loosely related, but they’re not the same thing. Credit scores are based on how you manage borrowed money, not how much you earn. 

Someone with a modest income who consistently pays on time and keeps balances low can have an excellent credit score, while a high earner with late payments or maxed-out cards might score poorly. 

Lenders may consider income when evaluating your ability to repay new credit, but it doesn’t directly influence your credit score. Your financial behavior, not your paycheck, determines your creditworthiness. 

Myth 9. You Should Never Increase Your Credit Limit 

It might sound counterintuitive, but increasing your credit limit can actually improve your score provided you don’t use it as an excuse to spend more. A higher limit lowers your credit utilization ratio, which signals responsible credit management. For example, if you owe $1,000 and your limit increases from $2,000 to $5,000, your utilization drops from 50% to 20%. 

Problems arise if you raise your limit and also raise your spending accordingly, high utilization is harmful. 

Many card issuers review accounts automatically and may offer limit increases to customers with strong payment histories. If your issuer offers a credit limit increase and you’re confident in your spending habits, take it. But maintain discipline. Keep spending in check, pay off in full, and avoid stretching beyond your means. 

Myth 10. All Credit Cards Are Basically the Same 

Not quite. While the core mechanics are similar, cards differ significantly in fees, interest rates, rewards, and benefits. Some cards offer cash back or travel miles, others prioritize low interest rates or balance transfers. 

For example, a 0% introductory APR card can be a great tool for paying down debt if used wisely, while a high-reward card might suit someone who pays in full each month and wants to maximize benefits. 

Choosing the right card depends on your habits and goals not marketing hype. Always read the terms, understand the fees, and pick the one that aligns with your financial priorities. 

We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.

The views and strategies shared in this material represent the author’s personal judgment and may differ from those of other contributors at IntriguePages. This content does not constitute official IntriguePages research and should not be interpreted as such. Before making any financial decisions, carefully consider your personal goals and circumstances. For personalized guidance, please consult a qualified financial advisor.