Credit Card Myths

Credit Card Myths

By Laura Bonilla

• Finalize and rehearse your presentation with a peer.

• Review what you’ve learned this week.

• Bust some common credit card myths!

​Learning Goals

Students will finalize their presentation, rehearse with a peer, and review common myths about credit cards to deepen understanding.

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Objective

Objectives & Goals

​APR

APR (Annual Percentage Rate) is the annual cost of borrowing money, expressed as a percentage. It includes both the interest rate and any fees. Interest accrues monthly based on your balance. For example, if your APR is 18%, it’s actually 1.5% per month. The higher the balance and the longer it’s unpaid, the more interest you’ll owe.

​The minimum payment trap

Making only the minimum payment means most of your payment goes toward interest, not the actual debt (principal). Over time, this traps you in a cycle of debt and causes you to pay much more than you originally borrowed.

What affects your credit score

• 35% – Payment History (Do you pay on time?)

• 30% – Credit Utilization (How much of your credit limit are you using?)

• 15% – Length of Credit History

• 10% – New Credit (Recent applications)

• 10% – Credit Mix (Types of credit you have, e.g., cards, loans)

Building and maintaining good credit

• Always pay on time (even the minimum)

• Keep credit usage under 30% of your limit

• Don’t open too many cards too quickly

• Check your credit report regularly

• Keep old accounts open to lengthen credit history

Multiple Choice

Carrying a credit card balance helps your credit score.

• Myth

• Fact

Multiple Choice

You should keep your credit card utilization under 30%.

• Myth

• Fact

Multiple Choice

Closing old credit cards improves your credit score.

• Myth

• Fact

Multiple Choice

Paying only the minimum keeps you in good financial shape.

• Myth

• Fact

Multiple Choice

Checking your credit score will hurt your credit.

• Myth

• Fact

Multiple Choice

A good credit score can help you rent an apartment.

• Myth

• Fact

Multiple Choice

Applying for many credit cards at once is good for building credit.

• Myth

• Fact

Multiple Choice

Interest is charged only on unpaid balances.

• Myth

• Fact

Multiple Choice

You need a credit card to build credit.

• Myth

• Fact

Multiple Choice

You should always carry a balance to build credit.

• Myth

• Fact

Multiple Choice

Paying your bill on time helps your credit score.

• Myth

• Fact

Multiple Choice

You can get into serious debt with credit cards.

• Myth

• Fact

Multiple Choice

All credit cards have the same interest rates.

• Myth

• Fact

Multiple Choice

You must be 21 to get a credit card.

• Myth

• Fact

Multiple Choice

Interest is calculated once a year.

• Myth

• Fact