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11 Common Credit Card Misconceptions and What is the Truth
Alex Blackwell
Frequently Asked Questions
How do I apply for a credit card?
You can complete a credit card application in several ways: online, on a paper application, or on the phone. Applying for a credit card online is convenient, and you can get a decision almost immediately. Be prepared with personal details like your date of birth and Social Security number, details on income and housing costs, and information on any authorized users you want to add to the account.
Learn More: How To Apply for a Credit Card
Can you withdraw money from a credit card?
Most credit cards allow you to access cash using your card account. It’s called a “cash advance,” and generally, it’s very expensive. You’ll pay fees for the advance, a high interest rate on the amount you withdraw, interest begins to accrue immediately, and you will reduce the amount of credit you have available to you.
Learn More: Why You Should Avoid a Credit Card Cash Advance
Does closing a credit card hurt your credit?
Closing a credit card can hurt your credit score. This is because a key part of your score is the “credit utilization ratio.” That’s the amount of total available credit you have spent or used. By closing a credit card, you reduce the amount of credit available to you, which worsens this ratio.
Learn More: Does Closing a Credit Card Hurt Your Credit Score?
How many credit cards should you have?
The “right” number of credit cards to carry depends on your spending habits, your income, and how you manage your credit. But according to the credit bureau Experian, the average American credit cardholder has 3.84 of them, which may be a useful baseline. Whatever the number, the most important thing is not to let them blow up your budget.
Learn More: How Many Credit Cards Should You Have?
Can you get cash back on a credit card?
Yes, if your credit card is a cash-back rewards card. These cards offer a small percentage of cash back on most types of purchase transactions. The best cash-back cards return 2% on every purchase. Some may offer a lower base rate (like 1%) but a higher one in specific categories, like gas or dining out (as high as 5%).
Learn More: Pros and Cons of Cash-Back Credit Cards
How do I get my first credit card with no credit history?
Look for a secured credit card if you can provide a security deposit for the card or see if you’re pre-approved for an offer with low eligibility requirements. When you’ve established credit, you may qualify to get your deposit back.
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11 Common Credit Card Misconceptions and What is the Truth
Alex Blackwell