Credit Card Myths That Are Keeping You Broke
Credit card advice tends to arrive as absolutes — “never use one” from one direction, “just pay the minimum” from another. Both extremes are wrong, and believing either can genuinely cost you money.
By the First Wage Editorial Team · Published 18 September 2026 · 9 min read
The Short Answer
The most damaging credit card myths are: that avoiding credit cards entirely is the safest financial choice (it actually makes building credit history harder), that paying only the minimum is a reasonable long-term approach (it’s one of the most expensive ways to borrow), that closing old cards always helps your credit score (it can actually hurt it), and that a credit limit is spare spending money (it’s borrowed money you owe back, often with interest). Understanding what’s actually true, rather than the version of each myth that feels intuitively safe, is what lets you use a credit card as a genuinely useful tool rather than either avoiding it unnecessarily or falling into its most expensive habits.
Myth: “The Safest Thing Is to Never Get a Credit Card”
Avoiding credit cards entirely feels cautious, but it comes with a real cost: no credit history. Lenders assess you based on a track record of responsible borrowing, and having none — a “thin file” — can make it harder to get approved for things like a mortgage later, not easier, since there’s very little for a lender to assess.
Using a single, low-limit credit card responsibly (small purchases, paid off in full every month) is a low-risk way to build that history over time, which is genuinely useful well before you might need it for something significant like a mortgage. See our guide on what a credit score is and why it matters at 20 for more on why this matters.
Myth: “Paying the Minimum Each Month Is Fine”
Paying only the minimum keeps your account in good standing in the sense that you won’t be marked as late, but it’s genuinely one of the most expensive ways to borrow money that exists. Interest continues accruing on the remaining balance, and because minimum payments are often calculated as a small percentage of the balance, clearing a balance this way can take far longer — and cost far more in interest — than most people expect. See our guide on how credit cards actually work for the full mechanics.
Myth: “My Credit Limit Is Extra Money I Have Available”
A credit limit is the maximum you’re permitted to borrow — it isn’t income, savings, or money that’s yours in any sense. Treating a credit limit as spare spending capacity is one of the most common paths into a balance that’s genuinely difficult to clear, particularly once interest starts compounding on an amount that was never actually affordable in the first place.
Myth: “Closing Old Credit Cards Always Improves My Credit Score”
This is often the opposite of true. Closing an old account can shorten your average credit history length and reduce your total available credit, which — if you still carry any balance elsewhere — can actually increase your credit utilisation percentage and lower your score, not improve it. If a card genuinely isn’t needed and has no annual fee, there’s often little harm in keeping it open and unused, rather than assuming closing it is automatically the responsible choice.
Myth: “Checking My Own Credit Score Damages It”
Checking your own credit report or score, through a credit reference agency or a free checking service, is classed as a “soft” check and has no negative effect on your score. Only “hard” checks — which happen when you actually apply for credit — have any impact, and even then the effect is usually small and temporary. Regularly checking your own report is a genuinely useful habit, not a risk.
Myth: “A Higher Credit Limit Is Always Better”
A higher limit can help your credit utilisation percentage look better if your spending stays the same (since you’re using a smaller proportion of a larger limit), but it also increases the amount you could potentially owe if spending habits change. A limit that’s comfortably higher than your typical spending, used carefully, is genuinely useful — a limit that simply enables more spending than you can realistically pay off in full each month isn’t a benefit, regardless of how large it looks.
Myth: “Store Cards and Regular Credit Cards Work the Same Way”
Store cards — credit accounts tied to a specific retailer — often carry meaningfully higher interest rates than standard credit cards, even though they’re marketed similarly with in-store discounts as an incentive to sign up. The discount offered at checkout can be genuinely small compared to the interest cost if the balance isn’t cleared in full, which is worth weighing carefully rather than assuming a store card is functionally interchangeable with a standard card.
Myth: “Using a Credit Card for Everything Is Reckless”
Used correctly — spending only what you’d spend anyway, paying the full balance every month — a credit card used for regular spending isn’t reckless at all. It builds credit history, and many cards offer additional purchase protections that a debit card doesn’t. The risk isn’t the frequency of use; it’s whether the balance is being cleared in full each month.
First Wage Takeaway
Most credit card myths push toward one of two unhelpful extremes: total avoidance, or treating a card as free spending money. Neither reflects how credit cards actually work. Used deliberately — a manageable limit, paid off in full every month, kept open rather than closed once it’s served its purpose — a credit card is a genuinely useful financial tool, not something to fear or something to spend carelessly against.
Frequently Asked Questions
Is it true that having multiple credit cards is automatically bad for my credit score?
Not automatically — what matters more is how responsibly each is managed and your overall credit utilisation, not simply the number of accounts you hold.
Does carrying a small balance instead of paying in full help build credit faster?
No — this is a persistent myth. Paying in full every month builds credit history just as effectively as carrying a balance, without the added cost of interest.
Is a credit card worse for my finances than a debit card?
Not inherently — a credit card used responsibly (paid in full monthly) costs nothing extra and builds credit history, which a debit card doesn’t do at all.
Should I avoid applying for a credit card if I’m not sure I’ll be approved?
A single, considered application is generally fine — it’s applying for several credit products in a short space of time that can temporarily affect your score, not one careful application.