1. Never Sign the Back of Your Card
The logic behind this myth might sound logical: If you write “See ID” or leave the signature box blank and someone were to steal your card, the thief wouldn’t have matching ID, forcing the merchant to refuse the transaction. Makes sense, right? Well, we all know that cashiers rarely check the back of the card or ask for ID. You’re better off signing the back of the card so the thief doesn’t just sign their version of your signature in the blank signature box. Technically, your signature on the back of a credit card seals your contract with the credit card company, which grants you certain consumer protections.
2. Multiple Credit Cards Are Bad for Your Credit
Multiple credit cards can be bad for your credit score—indirectly. Every time you apply for a credit card, companies require a hard inquiry into your file. These hard inquiries can decrease your score by a few points. Also, if organization isn’t your strong suit, multiple credit cards could complicate your finances. Late payments and high credit card balances if left unchecked will eventually have a negative impact on your credit score.
Specific conditions aside, there is nothing inherently bad for your credit about holding multiple credit cards. In fact, if you have good credit, adding more lines of credit will reduce your overall credit utilization, which is good for your credit score.
To drive the point home, meet Walter Cavanagh of Santa Clara, California. “Mr. Plastic Fantastic” is a Guinness world record holder for owning 1,500 active credit cards, a $1.7 million line of credit and an excellent credit score. Dream big.
3. Your APR will Always Stay the Same
Credit card companies will try to entice you with offerings like “0% APR*” in large print with teeny-tiny writing on the bottom “*for the first 12 months”. When it comes to your finances, it’s essential to read the fine print. There are several factors that might impact a change in your APR—late payments, your APR is based on the prime rate or you’ve been a cardholder for 12 months and your card issuer wants to raise your rates. It might not seem fair, but that’s showbiz, kid.
Still confused about APR? Our simple APR calculator can help.
4. You Should Cancel Credit Cards You're Not Using
Not necessarily. We covered this a bit in #2 but cancelling cards doesn’t automatically mean good things for your credit score. Even if you aren’t using certain cards, leaving them open leaves you more available credit, gives you lower credit utilization and a more established credit history.
However, if a card is collecting dust while charging you an annual fee, it might be time to consider cancelling it.
5. Missing a Credit Card Payment Always Impacts your Credit Score
If you’re a couple of days late on your credit card payment, there’s no need to sweat. Banks report your credit card payments to the credit reporting agencies only 30 days after the due date of the missing payment. That doesn’t mean you’re off the hook of course. After 30 days, your late credit card payment can start to have a devastating impact on your credit score. If you lose track of your credit card bill, pay it back quickly and set up system of reminders for the future.
While your credit score won’t be impacted immediately, banks can charge you late fees after the first day of missing payments. If it’s your first late payment, you can call the credit card company to try to waive the fee.