The Truth Behind Some Credit Card Urban Legends
You've probably heard and even believed some of them, but acting on credit card myths can cost you more financial harm than good and even trash your credit rating. Here are some of the most widely-circulated credit card urban legends to keep a cautious eye out for.
Credit card myth # 1
Myth: Writing 'See ID' or 'Ask for ID' instead of your signature on the back of the card will deter card thieves and free you of liabilities should it be stolen and used. The 'See ID' sign reminds salespersons to check the name on the card against the person holding it.
Fact: An unsigned credit card is considered invalid. Furthermore, many salespeople hardly ever check for signatures. As a result, they are likely to miss 'See ID' on the card's signature space.
Will writing 'See ID' free you of liabilities should your card be stolen and used? Lauren Zeichner, an attorney with Consumer's Union says no. Zeichner said, '' no matter what's on the back, you're only liable for up to $50 charged when a card is stolen, and some companies waive that for their cardholders. Writing 'Ask for ID' might encourage a retailer to ask for your ID, but it has no legal bearing."
Credit card myth # 2
Myth: The American Express card offers no credit limit, meaning you can buy everything you want. Years of effective ad campaign have discreetly imbedded in your subconscious the message" No preset spending limit." So after activating your AmEx card, you can go buy yourself the latest Ferrari or Porsche model. There's no spending limit, right?
Fact: American Express no longer releases the card types that allow you to incur a lot of debt, provided you can pay all of it every month. If you look closely at the card info, the words "no preset spending limit" are often followed by an asterisk (*). The fine print states that the phrase '' does not mean unlimited spending.'
"There is no preset spending limit. It's dynamic. It can change based on your financial situation and how you use the card," says Mona Hamouly, an American Express spokeswoman.
Credit card myth # 3
Myth: Paying more than you owe can boost your credit card rating. What's more, using just a small percentage of the available credit or keeping a low utilization ratio improves your credit score.
Fact: Roslyn Whitehurst, a spokesperson for the credit bureau Experian says "Even though you may be below zero on an account, it's assumed that's a temporary situation. Whether you've got a credit of $100 or $1,000, it still shows as a zero balance for scoring purposes."
Credit card myth # 4
Myth: You can improve your credit card rating by using your debit card responsibly. Since credit and debit cards, both carrying AmEx, MC, Visa or other logos, look identical, they are treated by retailers in almost the same way. Hence, both cards can affect credit scores.
Fact: "Having a bank account with a debit card and maintaining it properly shows that you're a responsible consumer," says national priorities director for Consumer Action Linda Sherry in Washington, D.C. "But it is not taken into account'" in credit ratings, she further states.
About the Author:
The author of this article is Benedict Yossarian. Benedict recommends Real Claims for Mis Sold PPI or if your company is facing financial difficulties Wilson Field for Pre Pack Liquidation.
