5 Money Myths You May Have Heard
5 Money Myths Debunked
Everyone has an opinion about how you should manage your money, but many of the common financial tips out there are outdated or just plain wrong. Following the wrong advice can cause problems with your finances, which is why we’ve addressed some of the most common personal finance myths. Let us help you get your facts straight about credit cards, debt, savings and more.
Myth #1: Avoid Credit Cards
Plenty of people are afraid of credit cards, and for good reason: credit cards make it easy to rack up debt. However, if you use them responsibly, cards can be a great tool to manage your money. If you’re wondering if you should get a credit card, here are a few tips. Leaving a balance on your credit card can cause interest to build up quickly. But, as long as you’re making payments on-time and only spending what you can afford, it’s worth it to have at least one credit card. Keeping up with your payments increases your credit score, which gets you better loan terms, insurance discounts and lower interest rates.1 Most credit cards also offer rewards programs that let you redeem points for cash or other reward options. Just keep an eye on your budget to avoid being surprised with a large amount due at the end of the month.
Myth #2: I Don’t Make Enough Money to Save
If you’re behind on your rent and utility payments because you don’t have enough in your bank account, this may be true. However, if you can put even a small amount into a savings or retirement account, it’s worth it. Here’s how to save, even if you don’t think you make enough. If you don’t have a budget, start by making one. Set aside a section of your budget for savings and get that money moved to a separate account as soon as your paycheck is deposited. You will not be tempted to spend what you don’t see in your account.
Myth #3: Debt Is Normal
Is debt normal? Unfortunately, two out of three Americans are in debt.2 Although debt is common, it shouldn’t be normalized or encouraged. While some people believe in “good debt” like student loans or mortgages, most debt, like credit card debt, carries high interest rates and hurts your credit score. Having debt keeps you from building wealth and meeting your goals. Not only that, owing money is stressful and can take a toll on your mental health.
Myth #4: You Should Carry a Balance on Your Credit Card
One widely spread money myth is that keeping a balance on your credit card every month will improve your credit score3, but it does the opposite. The truth is that paying off your credit card in full each month is the best way to build a good credit score. It also saves you money because you’ll avoid having to pay interest fees. Payment history is the biggest factor to your credit score, so if you want to improve your credit, focus on making regular, on-time payments.
Myth #5: Getting a Loan Is a Bad Idea
Depending on how fast you need the cash, taking out a loan isn’t always a bad idea. For example, if you have an unexpected medical bill or need to replace your car tires quickly, a payday loan could be a good short-term plan during a stressful time, if you make sure to pay it back when you get your next paycheck. Let LendNation help you through an emergency with a number of different products to fit your needs including a cash advance, installment loan, payday loan or even a title loan if you own your own car. Stop by one of our more than 400 locations or start your online application for a loan today!