Plastic best practices got you down? Here’s what you really need to know before getting your first credit card(s).

By Real Simple Editors
Updated June 18, 2019
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When you're just starting out in the real world, it's hard to know where to turn for the best, most realistic advice when it comes to credit cards. You listen to your parents, older siblings, and friends, but we're guessing you're getting mixed messages about the dos and don'ts of credit cards—from whether or not you should get one (you should!) to missed payment penalties. Here's a list of the most common credit card misconceptions that get thrown around far too often—and the real advice you should listen to instead.

MYTH #1: You need only one credit card.

Here's the truth...

More like two cards (not counting store cards). Ideally, your main credit card should be a rewards card you use to charge everything, racking up points in the process. (Always pay the bill in full each month to avoid interest charges.)

The second card should be a backup, to be used primarily for emergency expenses. For example, your brakes go out and you must replace them stat. In case you ever need to carry a balance, make sure the card has a low interest rate (look for an APR in the midteens) and a high limit, such as $5,000 or more. Then use this card once a month. One idea: Set up one of your recurring bills, like electric, on auto pay to keep the account active, says Gerri Detweiler, the head of market education for business financing website Nav. Otherwise the issuer may close the account.

If you already have more than two credit cards, don’t fret. Keep the accounts, as long as you’re using them responsibly—meaning, you pay the balance every month and use less than 10 percent of your total available credit. But if you have a hard time keeping track of balances, due dates, and terms and conditions, then you might want to reduce the number you carry to two.

MYTH #2: Moving a balance from one card to a lower-interest-rate card saves you money.

Here's the truth...

It seems like 80 percent of your snail mail is made up of credit-card solicitations, right? And while the cover letters make it sound like balance transfers are awesome for everyone, that’s not necessarily true.

On the pro side of balance transfers: You'll reduce how much you owe each month, save money on finance charges, pay less in interest charges, and overall make your financial life simpler. The cons: Transfer fees could cost you as much as 5 percent of the balance. So moving $5,000 from card A to card B would cost you $250. Plus, it's important to note that sweet deals, like zero-percent balance transfers for 18 months, are typically reserved for those with a spotless credit history.

Before applying for a new card to which you plan to transfer a balance, find out these important pieces of information from the issuer’s website or a company representative.

  • How long the introductory-interest-rate period lasts
  • How much you need to pony up each month to pay off the balance before that time ends
  • The balance-transfer fee
  • The penalties you’ll incur for late or missed payments
  • Whether the “teaser rate” applies to new purchases

MYTH #3: Paying an annual fee is a waste of money.

Here's the truth...

Surprise, surprise: A credit card can be worth the cost. Before you sign up for one, however, do some math to see if the benefits pay for, or exceed, the yearly charge. Say an airline-sponsored card charges a $100 annual fee but allows cardholders to check one bag for free on every flight. If you take a few round-trip flights a year, that'll be a huge win.

MYTH #4: There’s no harm in signing up for store cards.

Here's the truth...

Who says no to a discount—especially when you're ready for a full wardrobe makeover? Well that’s exactly what retailers count on when they offer promotions, discounts, rewards programs, zero-percent financing, and other perks if you open a card account with them. Some store cards can be worth having, but don’t sign up for every one you’re offered—that'll put you at risk of racking up debt. “Get them only from the one or two stores that you frequent the most; otherwise you may lose track of when the various bills are due,” says Bill Hardekopf, CEO of, a credit-card comparison site.

This rule of thumb especially holds true if you’re in the market for something big that requires financing, like a new car. Why? Each application for a new credit card triggers an inquiry on your credit report. Opening several accounts in a short period of time makes you look like a risky borrower and could reduce your credit score by up to 30 points. As a result, you might only qualify for a loan with so-so terms.

If you’re the type who never pays her credit-card bill in full, always say no to store credit cards. They usually charge interest rates that exceed 20 percent, compared with 14 percent and up for regular cards.

MYTH #5: One missed payment won’t damage your credit score.

Here's the truth...

Unfortunately, it could. Your credit score could plummet more than 100 points—especially if you had a great one (700 or higher). That’s because the higher it is to begin with, the harder the fall. “Someone with a lower score is already seen as a risk, so their messing up is almost expected. As a result, they would potentially lose only 60 to 80 points,” says Liz Weston, author of Your Credit Score.

If making the payment totally slips your mind until the next month’s statement arrives, there’s not a lot you can do—except set up automatic bill pay, which, you should absolutely do.

MYTH #6: Persuading your issuer to reduce your fees or increase your credit limit is near impossible.

Here's the truth...

It actually is possible to do! Say you want a lower interest rate. Call customer service, mention that you’ve received a couple of attractive competing offers, then tell the representative that you'd like to remain a loyal customer but that you're weighing your options. Then ask, "What can we do to work this out?" instead of, "What can you do for me?" "Using 'we' when you’re talking about a solution creates a sense of working together toward a common goal," says Noah Goldstein, a professor of management and organization at the UCLA Anderson School of Management. Keep in mind, however, that if you’ve practiced poor behavior (maxing out your card, habitually skipping payments, or having poor credit), your issuer probably won’t do you any favors.

MYTH #7: Using a debit card and using a credit card is basically the same thing.

Here's the truth...

Not quite. Debit cards definitely have their benefits: Unless you overdraw, you can’t spend more than the amount that’s in your bank account, and you don’t have to worry about late fees or interest rates.

Credit cards, however, are generally more consumer-friendly. According to federal law, a credit-card user will pay, at most, $50 if fraud occurs on a card. (Even better, many issuers offer zero liability, meaning you won’t pay a penny.) In sharp contrast, a debit-card user can be on the hook for $500 if they don't report the unauthorized transactions within two business days of learning about them, according to the Federal Trade Commission. And if more than 60 days go by before the bank is informed of the fraud? Say goodbye to all that money.

Use plastic for all online purchases and for all big-ticket items (sofas, coffeemakers, trips to Europe), since your credit-card company will refund your money if the item you purchased was misrepresented. This won’t happen with a debit card. Additionally, when you use a debit card for certain types of purchases—those in which the final purchase price is unknown at the exact time of the swipe, like filling your tank with gas or making hotel reservations—the merchant can place a hold on your account and reserve more money for itself than you actually spend, says Linda Sherry, director for national priorities for San Francisco–based watchdog group Consumer Action. Example: A gas station might freeze $100 (even though you bought only $20 worth of gas) for several days. If you need that money, you’ll be out of luck until it removes the hold.

MYTH #8: With a “cash back” credit card, you basically get paid for shopping.

Here's the truth...

Sadly, there’s no (totally) free lunch. Yes, rewards-card issuers promise to give you back a percentage of your credit-card purchases every month—sometimes after you earn a preset minimum, ranging from $20 to $100. You receive the cash back in the form of a check, a credit toward your balance, or a gift card.

However, there are a few catches: You’ll need a gold-plated credit score (720 or higher) to qualify for the cards with the best rewards, like those that offer 1 to 1.5 percent cash back on all purchases or up to 6 percent back in bonus categories, like dining or at designated retailers. Cards with the most lucrative rewards levy an annual fee of $50 to $100; their interest rates are higher on average than those for standard cards; and some issuers cap how much cash back you can accrue in a year. These cards can pay off if you spend a lot in categories offering cash back, like gas and clothing, says Beverly Harzog, a credit-card expert. But if you usually carry a balance, she says, “opt for a low-interest card or you’ll spend more on interest than you’ll ever get in cash back.”

Excerpted from The Real Simple Guide to Real Life: Adulthood Made Easy. Copyright © 2015 Time Inc. All rights reserved.