There are many myths and untruths flying around out there when it comes to credit and finances in general. So, I thought I would take a closer look at some of the most common financial misconceptions and credit myths in order to dispel them and provide readers with more accurate information.
First, many people think that a credit card with what appears to be low interest rate is automatically a good deal and is better than the card already in their wallet. The fact is that many credit cards have these so-called introductory “teaser” rates but, when the introductory period is over, you might actually find yourself with a card with a much higher interest rate than what you had before. So be absolutely sure to read the fine print and the disclosure on the application page BEFORE you apply for the card to make sure you know what the interest rate will become after the introductory period expires.
Another popular myth is that it’s almost always a good idea to take advantage of those zero interest financing offers that we so commonly hear about. While these offers sometimes make sense, once again you need to read the fine print in order to find any pitfalls. For example, you might find that the interest rate shoots up to an exorbitant interest rate after only a single late payment or if you do not pay off the balance by a certain date. If you’re going to take advantage of one of these offers, make sure you are in a position to pay down the balance entirely before the high interest rate kicks in.
Yet another myth is that you can only get a copy of your credit report when you apply for a loan or a mortgage. In reality, you are allowed by law to get a copy of your credit report for free every year. As I have mentioned in previous posts, you can do this by visiting http://www.annualcreditreport.com/ or by calling 1-877-322-8228. Be sure to take advantage of this and order your report at least once a year so you can check for errors and discrepancies.
You also need to watch out when you sign contracts, as many people mistakenly believe that they automatically get three days after signing a contract to cancel the deal if they change their mind. While this may be true in some cases, it often is not. When purchasing a car, for example, your contract is binding as soon as you drive off of the lot.
When renting an apartment and paying a security deposit, it is also important to know your rights. Many people think their landlords can hang onto their security deposits to pay for wear and tear repairs such as repainting the apartment, but this is not true. Landlords can only keep deposits if they need to make repairs that are not due to “normal wear and tear” or if the tenant breaks his or her lease and moves out early, causing the landlord to lose money when he or she cannot find a new tenant.
The more you know your rights, the better you will be able to handle your personal finances and get ahead in the money game.