6 Credit Card Myths You Should Stop Believing

Credit Cards have gained immense popularity for good reason—they offer unmatched convenience and are accessible to almost everyone, from students to retirees. Beyond rewards and exclusive experiences, Credit Cards play an important role in building and maintaining a healthy credit score. During emergencies, they are often the preferred financial solution.

However, managing repayments, understanding credit terms, and maintaining a strong credit score can sometimes feel overwhelming. This has led to several misconceptions that may confuse users. Staying informed is the key to making the most of your Credit Card.

Here are some common myths surrounding Credit Cards:​​​​​​​

A new credit card can dent your credit score

When you apply for a new Credit Card, the issuer conducts a “hard inquiry,” which can cause a slight dip in your credit score. While multiple applications in a short period can have a noticeable impact, a single inquiry typically reduces your score by only a few points. With consistent on-time payments, your score can recover quickly and even improve over time.

One Credit Card is plenty

While it is wise to avoid overspending, having multiple Credit Cards can be beneficial if managed responsibly. Additional cards provide flexibility during emergencies and allow you to earn varied rewards. For example, the HDFC Bank Regalia Credit Card is suitable for frequent travellers, offering lounge access and lower international transaction charges. Multiple cards can also help lower overall credit utilisation, which positively impacts your credit score.

Old/unused Credit Cards must be closed

Closing old Credit Cards can negatively affect your credit score. Credit utilisation is calculated based on the total credit available across all cards. Closing an old card reduces your total available credit, increasing utilisation. Additionally, older accounts contribute positively to the length of your credit history, which is an important scoring factor.

Avoid credit limit hikes if you don't need them

Higher credit limits are often offered as a reward for timely payments and responsible financial behaviour. Accepting a credit limit increase can lower your utilisation ratio, as your spending becomes a smaller percentage of your total credit limit. This can strengthen your credit profile without requiring additional spending.

Make your monthly settlements ASAP

Conventional wisdom suggests paying your Credit Card balance in full every month, which is generally a good practice. However, the idea that carrying a small balance can sometimes reflect active credit usage has led to confusion. While timely payments matter most, avoiding missed or late payments is far more important than the timing of full settlement within the billing cycle.

Don’t accept a card with an annual/renewal fee

Whether a paid Credit Card is worth it depends on your spending habits and lifestyle. Fee-based cards often come with premium benefits. For instance, the HDFC Bank Infinia Credit Card offers dining discounts, lounge access, fuel surcharge waivers, concierge services, high-value travel insurance, and complimentary golf sessions. When used well, such benefits can easily outweigh the annual fee.

Do not let common myths shape your Credit Card decisions. When used wisely, a Credit Card can be a powerful financial tool that enhances convenience, builds credit, and delivers meaningful rewards. If you are planning to apply for your first Credit Card or reassessing your current usage, understanding these misconceptions can help you make informed choices. Learn more about essential tips to avoid Credit Card fraud.

Apply for an HDFC Bank Credit Card here!

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.