Debunking The Top Credit Card Myths

They always tell you that as long as your credit utilization is underneath 30%, then you'll be okay, meaning, if you have a $1,000 limit, as long as the balance is under 300, then you'll be okay Technically. Yeah, technically, but the reason why you never want to carry a balance is because, listen, life throws curve balls and it only takes one before you start circling downwards very quickly. One moment you may have had the money and the next you have to spend it. And now you're carrying all these balances on these credit card and it starts adding up very quickly.

The journey to wealth is a long walk and some may walk quicker than others, but what good is sprinting to the finish line if you pass out when you cross it? On Walk to Wealth, we enlighten and empower young adults to build wealthy, abundant lives. They say the journey of 1,000 miles begins with a single step and your first step starts right now. This is Walk to Wealth with your host, John Mendez hey everyone, welcome back to the Walk to Wealth podcast.

If you're tuning in on YouTube or any of the podcast directories, make sure to do yourself one teeny, tiny little favor and make sure to give us a follow so you don't miss out on any of the amazing episodes I got coming on this year. So, without further ado, let's get right into this one. If you've seen the last episode in this series, then you would have heard my best tips for getting into the points and miles travel hacking game. Again, when I say points and miles, I mean for travel. There's a lot of trash credit cards out there that give you points. I'm not talking about that. I'm talking about when you really start getting into the travel hacking and transferring out points and travel partners and elite status and all that stuff. That's what I mean when I talk about the points and miles game. So I was giving you guys my best tips for that. And now for this final episode, I'm going to be talking about credit card misconceptions. Now, I know in the last episode I mentioned, one of my first hot takes was to never, ever, ever, ever get a store card. So misconception number one a lot of people think that store cards are great options to start building your credit and start getting into the credit card game, especially because when you're shopping at a store you like, usually they offer it to you and they'll give you some discounts back or rewards back or something like that. You'll save like 50% off your first purchase and you're already there spending 200 bucks. You could just save $100. So you're making saving money and I would at least stay away from credit cards, store credit cards. The reason being is that they don't only provide any real benefit. How many times do you shop at the store that you are getting a credit card, a store credit card at? Now? Let's say you shop at it a lot. Even still, you're going to be restricted with the way you can use the points. Usually, the points are only redeemable within that store or within that chain of stores, so now you can't transfer out to travel partners, Like with points. Let's say, I have my Chase Freedom Flex card. I could use those points to travel and to chase travel partner and portal. I could use that points for cash back. I could use that points to buy gift cards. I could use that points for so many different things On top of that. There's so many points back so many different points, back percentages and markers or whatever, multipliers or whatever. And there's so many other bonus points back for like, for example, with Chase. I transferred my Chase points to Marriott and Marriott matched me up to 50% of the points that I sent over. I sent over 100,000 points. They gave me an additional. They matched it 50,000 points just for like, literally, I guess, promotion. So you're not doing that with store credit cards. So there's that there's usually no upgrade or downgrade options. So if you do have a paid store credit card, like with an annual fee, there's usually no way out of it and, as I said, closing your credit card can be damaging to your credit score. So I would just stay away from them entirely. On top of that, it also the last thing I hate about store credit cards is that it encourages bad spending habits, because if you know you're not going to really use a card that that that much, then you're going to want to make use of it because you have it Like oh, I'm driving my old Navy, I got the car, let me see what bonuses and gifts and benefits they got in the store, and then you'll be spending more than you need to. That's the main misconception of store credit cards. They're not actually good for you. They're a way away big red flag, you know. Do not get engaged with them. The second misconception I always hear is that carrying a balance helps build your credit score. Now, I don't care whether that's sure or not. I'm going to tell you what I think, and what I think is that that is cap right. The reason being is because carrying a balance, think of it they always tell you that as long as your credit utilization is underneath 30%, then you'll be okay. Right, meaning, if you have a thousand dollar limit, as long as it's under 300, the balance under 300, then you'll be okay. So technically, yeah, right, technically. And something would say, as long as you have under 10%, you'll be okay, and it's like technically, yeah. But the reason why you never want to carry a balance is because, listen, life throws curveballs and it only takes one before you start circling downwards very quickly and one moment you may have had the money and the next you have to spend it. And now you're carrying all these balances on these credit cards and, that's said, you're getting really into the travel hacking space and you've got a hundred dollar balance with this card and another 500 dollar balance with that card and a $200 balance with this card and $100. And it starts adding up very quickly. Although they're not crazy crazy high individually, $500 is a kind of a lot, depending on who you ask. And it's like as you start getting these more cards and they all have balances and they're all under 30% it starts adding up really quickly and then eventually you won't be able to pay it back, right? So make sure you don't ever carry a balance. You want to make sure you pay it back in full, right? Always, always, always. I don't care what anyone tells you, right? You can build your credit score. Pay your cards off in full. That's what I did. My credit score is absolutely amazing, so you don't have to carry a balance to build a credit score, right? The next big misconception is that you have to find the best interest rate on credit cards. Get out. Here's why that is a myth. If you follow the John Mendes method of paying your cards back in full all the time, well then, you're never going to have a balance. And if you never have a balance, you never have any interest. Interest doesn't exist when you don't have a balance, and if you're using your credit card responsibly, you'll never have a balance. So there's no, I don't look at APRs. I don't know what my APR is on any single card at all whatsoever. And I told you in the last episode make sure you have a solid financial savings of at least three months, preferably six, for this exact reason. For one month, in case you don't have it with your regular income, you can take from your savings and pay it off in full. Never, ever, hold a balance. If you never hold a balance, then interest becomes irrelevant. And if you can't buy it twice, don't buy it once. So interest rates you do not have to look for the best interest rate. It is a complete myth. I don't ever check it out, but hey, that's just me, that is just me. And then the last misconception is that the only important date that you need to know is the payment due date. That is false. So there's two important dates that you need to know. There's a payment due date, right, and there's the closing date. So the payment due date is when your minimum monthly payment is required. So let's say you have to pay 40 bucks on the seventh. If you don't pay that 40 bucks on the seventh, you will then incur a late fee. Now there's ways to go about getting that taken off. Let's just top it for another episode. But you will incur a late fee and then now show up on your credit report, which is not a good look because payment history is one of the biggest, I guess, chunks that makes up your credit score. So payment due date, that's what. That is right. When do you have to pay the minimum, the payment, not the payment closing date. The closing date is when they actually close off for that statement, that monthly statement, and send it over to the credit bureaus. So let's say you pay off. You have a balance right now of a thousand right, and now you pay off a thousand. On the seventh. Usually your closing date is three days after right. So let's say the tenth is my closing date, right, but on the ninth I say I put on another thousand dollars spend, right. And then on the closing date on the tenth, although I paid my card off and folded originally by the payment date on the ninth right, I made another thousand dollars spent. And let's say that payment gets processed. Then on the tenth, when the statement closes and it gets sent out, I'm going to show you I have a balance of a thousand dollars, right. And let's say my credit limit is, let's say, 1200. That's virtually my entire credit utilization right there. So that's going to negatively affect my score. So you've got to be very careful as to when you're using your card around the payment date and the closing date, because you could very much pay your card off in full and then the next day run up another biggest expense and then when the closing date comes, then it gets sent out and you have a high balance. So be very careful, very mindful as to when your payment date is and when your closing date is and making any transaction in between those dates right. And so those are some just quick misconceptions that I wanted to make sure I hit in this credit card series. Make sure, if you like this series, you're going to love the next one, because I want to keep talking about how I got into personal development, how I started investing in me, how I started learning about myself and growing as a person growing spiritually, mentally, emotionally, physically the whole nine yards, a full circle. Because health is more than just a monetary side of things. I mean wealth is more than just a monetary side of things. Wealth is about abundance in all your areas of life. So that is it for this series. Thank you guys so much, and you're going to love the next series. I'm about to get really deep in self, if you like self reflection, if you're a deep thinker, if you're looking to grow and expand, if you're looking to, if you've been kind of stuck in the rut and you need to push the needle forward but just haven't been able to. This next series I'm about to share with you guys about how I got into personal development is going to really light that fire underneath you guys and help you start growing. So thanks again for tuning in. I'll see you guys in the next series.

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