The debate over whether high schools in America should teach financial literacy courses rages as students continue to rack up credit card debt. In 2022, 46% of college students used credit cards, and 40% carried at least $1000 in credit card debt. 

More disturbing is that the same study found that 38% of those with credit card balances didn't plan to pay them off every month. Robert Manning, author of Credit Card Nation, says this is about student credit. “While freshman and their parents are likely thinking more about tests and academics during orientation, the fact is that after graduation, a student's credit rating is arguably far more important to his or her future than grade point averages.”

Teaching financial literacy can be difficult when dealing with teens and young adults, especially if you never learned it yourself. Credit cards are confusing right out of the gate if you don't have the proper tools to pass along, and it is so easy to get wrapped up in online information until you don't know what's true and what isn't. To rectify some misinformation on credit cards, we've curated a list of the top myths people often believe about credit cards that aren't true. 

1. Credit Balances Are Good

This myth can be dangerous to buy into. Carrying a balance on your credit card means you're building interest on that balance monthly. This is a double hit to your financial future from a money and credit score perspective. It's a complete waste of money and negatively impacts your credit score. 

To combat this falsehood, pay off your full balance every month before the new billing cycle starts. You'll avoid anygrowing interest, and your credit utilization ratio (CUR) may improve. Your credit utilization ratio tells the big credit reporting agencies the percentage of your credit limit that is actively in use. The lower this ratio, the better. To lower this ratio, you'll need to pay the balance on your bill before the closing date of your current billing cycle. 

2. Canceling Cards Boosts Your Score

Mentally, this myth resonates with so many. Financially, it's easy to think that canceling a credit card should give your credit score a little bump if you're not using a credit card. Unfortunately, the exact opposite is likely to happen. It all hinges on that credit utilization ratio we talked about earlier. 

When you close a card with a zero balance, you also drop your available credit limit. This closure increases your CUR by increasing your debt-to-available credit ratio. An increased ratio tells the reporting agencies that you have become a riskier borrower. To combat this scenario, first pay down your balance on other credit lines to help lower your CUR.Once you've gotten your CUR lower, you can cancel that card without a drop in your credit score. 

3. Opening Multiple Cards is Bad

It's easy to think that having several open cards is a bad idea in the land of credit debt. Understanding how credit cards work helps to bust this myth. Having multiple cards open isn't bad. Mismanaging those credit lines is where people trip up. First, never apply for multiple cards at the same time. 

Making hard credit hits on your history can negatively impact your credit score. Also, paying off those balances on time, as mentioned above, is vital. Be mindful of how and when you open a credit card. Too many in the short run can cause banks and lenders to reject your credit application, even if you have a good credit history. 

4. High Credit Limits Aren't Good

Creditors set the limit they're willing to extend based on several factors, including your credit score and credit history. However, qualifying for a higher credit limit isn't necessarily bad. Often, people get caught in the trap of thinking that a high credit limit means they have to spend more. 

That simply isn't true. When a creditor issues you a card with a high balance, it only means they see you as a low-risk borrower. You're someone they won't have to chase to get their payments. Keeping that credit limit means paying off your balance every month, not overspending, and not racking up over-the-limit fees. It's a good thing, we promise. 

5. Never Send Just the Minimum Payment

For the most part, this rule of thumb (never paying just the minimum) applies well to managing your credit card debt.However, there is one exception: encountering a financial emergency. Financial hardships can derail your credit payments quickly, and knowing how to manage them is critical to your overall credit history. 

In this scenario, do everything you can to make that minimum payment and continue to pay it until you can get back on your feet and pay down the balance. Paying the minimum will save you from late and over-the-limit fees (if you're close to your limit) and keep your credit in good standing. After the emergency passes, if you're still struggling, you can consider other debt consolidation options to help pay down your debt and repair your credit. 

6. Missing a Payment Automatically Drops Your Score

We all know missing a credit card payment isn't a good way to boost your score. However, the myth that it automatically affects your score isn't entirely true. Missing your payment isn't a good precedent to set; however, it won't immediately affect your score. 

When you make your payment, the bank reports it to credit reporting agencies with a unique code. That code covers payments made on time and those up to 29 days late. At the 30-day mark, the code changes. If you pay within those 29 days, you will still be marked as on time and save yourself the late fee. There's a grace period here, but avoiding a late payment (even during that grace period) is an excellent habit to form earlier rather than later. 

7. Credit Card Terms Aren't Negotiable

As a consumer and customer, you have more negotiating power than you might believe. Your bank or creditor's ultimate goal is to keep you as a customer. They want you to use their products and services, and to do so, they'll make certain concessions. 

You might be surprised to know that banks and creditors will often give in to your demands to keep your business. This advantage could mean a lower interest rate on a credit line (especially if you're in good standing). It could also mean waiving your annual fee for a year or offering bonus rewards to make it worthwhile. If you ask and your creditor says “no,” you're no worse off than before you asked. 

8. Credit Cards Automatically Mean Debt

My parents used to tell me that a credit card was a fancy way to say debt. However, knowing how to leverage credit cards properly is essential to keeping yourself out of debt and still being able to utilize a credit card's available limit. 

Using your credit responsibly by not overspending, paying off your bill every month, and keeping your CUR low (as we've mentioned previously) are all ways to use credit cards without incurring more debt. To further this best-case scenario, pay attention to changing interest rates and due dates and adjust your automatic payments accordingly to ensure you don't miss a payment. 

9. Checking Your Credit Score Hurts 

You may find that your score is lower than you'd hoped, which can be disappointing. However, checking your score is considered a “soft pull” and won't negatively impact your score. The difference between a “soft pull” and a “hard hit” is that, as a consumer, you're going to want to know how your credit is doing. It's part of being financially responsible. 

A “hard inquiry” is done when you sign an application for credit and a creditor assesses your credit history, creditworthiness, and ability to repay what you borrow. Only this hard inquiry can negatively impact your score, and only temporarily. For this reason, it's important not to have too many hard hits in a short time. 

10. Never Accept a Credit Limit Increase

An increase in credit limit will not negatively impact your credit score. Like your original limit, you must continue using your credit card responsibly. Follow the rules lined out earlier in this article to ensure you're a dependable consumer, and the credit limit increase will open up more opportunities. 

By accepting a credit limit increase, you will automatically lower your CUR and be a lower-risk borrower to creditors in the future. Because your debt will be a lower percentage of your new credit limit, you'll be able to further your credit score without making additional purchases. 

11. A Higher Paying Job Means a Better Score

When we talk about credit card debt and applying for credit, it's easy to assume that you'll have a great credit score because you have a high-paying job. However, that's not how credit works. When you apply for a new credit line, your creditor will consider how much you make monthly or yearly. However, that's only one part of what makes up your creditworthiness. 

Much more important than how much you make is your credit history. A creditor wants to know how well you repay your debt, how often (if ever) you make late payments, and how many lines of credit you already have open. They'll like it if your income is substantial, but it's not the deciding factor on your credit score and is not necessarily a vital part of factoring your application for credit. 

12. Cash Advances Never Hurt Your Score

Overall, a cash advance is like any other credit card purchase. It may have a higher interest rate and can quickly raise your credit amount, but it won't negatively affect your score. 

However, to say that a cash advance won't ever hurt your credit isn't true. If you owe a balance on your credit card when you take a cash advance, your next payment may go toward your lower interest balance before it applies to your cash advance. If you only pay the minimum payment, interest on your cash advance (and any applicable fees) will accumulate, raising your balance owed and your CUR simultaneously. This scenario can negatively affect your credit score. 

13. Mixing Personal and Business Credit Is Good

No hard and fast rule forbids mixing your personal and business credit accounts. In fact, 76% of American small business owners have used personal credit to fulfill business needs. However, that doesn't mean you should mix them. 

First, by mixing your business expenses and personal credit, you've created a tax headache that will come back full circle on April 15th. While personal credit is easier to apply for, business credit has perks that personal credit can't offer. For instance, you can add employees to your business account, making it easy to delegate work where and when needed. Ultimately, it's entirely up to you whether or not you put your business accounts on your personal credit cards. 

14. Joint Credit Cards Will Negatively Impact Your Credit

A joint credit card is not the same as adding an authorized user. While an authorized user can access someone's credit, no one evaluates them for repayment history, credit score, or creditworthiness. It is the sole discretion of the account holder whether or not they add a child to help with building credit. 

However, a joint credit card is one that two people own equally. Both users will see the payment history, usage, and how long the account has been active. Every on-time payment, balance payoff, late fee, cash advance, and other account metrics will appear. It's a fantastic way for couples and business partners to build mutual credit, especially if one user needs to boost their score. By sharing and using the credit account responsibly, both account holders can see a boost to their overall scores.  

15. Never Add a Child to Your Credit Card

Adding a child as an authorized user on a credit account can be risky. However, it can be an effective way to help them learn how credit cards and credit work. If you're considering adding one of your children to your account, find a card that offers authorized users many of the same reporting perks you have as the owner. 

You'll help your children build a credit history and boost their credit score while absolving them of debt. This is a greatfeature for preparing your children to handle their own credit when they become legal young adults. When done correctly, it's a win-win for your credit and your family.