Were not exactly sure how some debt myths have circulated their way into popular thinking, but one thing is for sure were here to stop these debt myths in their trackssays Andy Hygate frombad credit loans. Whether you think its smart to use your retirement savings to pay off your credit card debt or think that credit card rewards are worthwhile, its time to reveal the truth, one little debt lie at a time:
Using Your Retirement Savings To Pay Off Debt. Whatever you do, do NOT touch your retirement savings to alleviate any credit card debt. You should do everything possible to make sure that your retirement nest egg is untouched and this means resisting the temptation to withdraw from your pension or 401(k) fund to kiss your credit card bills good-bye. Use your regular savings to pay off any debt, but make sure you wont charge up a large balance again thats a great way to get yourself into even more financial trouble!
Reward Cards Are A Great Value. How many of us actually use our rewards frequently enough to warrant a rewards card? The simple truth is that were charged more for these rewards in the form of larger finance charges and interest rates; additionally, with many consumers not even making the effort to claim their rewards, its just another way to flush your hard-earned cash down the drain.
Bottom line: unless you cant live without your rewards, get a card with a low-interest rate instead your bank account balance will thank you for it!
Perfect Credit Will Solve All Of Your Financial Problems. Ah, perfect credit. It seems like the holy grail of the financial world, doesnt it? However, its important to remind yourself that credit is harder to come by thanks to the recession, even if your credit score is perfect. This is due the reluctance of lenders to lend, despite the fact that many people have demonstrated their financial responsibility even in the midst of the recession. So dont fuss over a few points on your credit score right now in the middle of this recession, you should just focus on getting that emergency fund up and running and your debt paid off.
Close Any Old Credit Card Accounts. Before you close down that old account, stop! Once upon a time, financial experts believed that old credit card accounts just dragged down your credit score; however, a major part of your credit score is made up of your available credit to used credit ratio. In other words, the more available credit you have, the higher your credit score will be. Closing those old accounts will only shrink your credit to debt ratio, which means a lower credit score.
Yes, these popular debt myths have been around for quite some time and chances are theyll be around for a little while longer. Yet if you want to be smart with your finances, dont fall for any more debt lies; instead, give yourself a financial education so you wont be fooled again!
Andy Hygate writes for Loans Bad Credit, a leading UK provider of Bad Credit Loans.