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7 irrational credit card fears (and 7 REAL worries)


Are you or someone you know afraid to use — or even obtain — plastic? Sure, credit cards come with a series of essential cautions, but overall they are safe and useful financial management tools.

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Are you or someone you know afraid to use – or even obtain – credit cards? Sure, these products come with a series of essential cautions, but overall they are safe and useful financial management tools.

It’s time to separate fact from fiction. Here are the top seven most exaggerated credit fears, along with the real concerns that come with the responsibility of carrying credit:

7 credit card fears vs. real concerns
Fear No. 1:Dinging credit score by applying for creditReal concern:No credit history
Fear No. 2: Online shoppingReal concern: Fraudulent websites
Fear No. 3:Going credit crazy Real concern:High debt and late payments
Fear No. 4:Asking creditors for helpReal concern:Running from credit troubles
Fear No. 5:Insufficient borrowing powerReal concern:No savings or insurance
Fear No. 6:Credit counselingReal concern:Credit repair doctors
Fear No. 7:Going to jailReal concern:Wage garnishment



Fear No. 1: Severely damaging your credit score by applying for credit

Many people worry that a single application for a loan or credit card will cause their credit scores to plummet. That’s too strong, says Lucy Duni, vice president of consumer education for by TransUnion.

Although self-generated inquiries do have an impact,  the effect is usually minimal. With each application, a hard inquiry is added to the report, resulting in a slight decrease. How much? “About five points is a good rule of thumb,” says Duni.

Also, inquiries are only factored into a score in the first 12 months of their two-year credit report listing. Compared to payment history and debt, which together comprise 65 percent of a FICO score, inquiries are almost irrelevant at 10 percent.

Still, for people with little information on their credit reports, inquiries take on greater scoring weight, and multiple inquiries in a short period do add up. Apply prudently.


Real concern: No credit history. 

 Someday you may want to finance a home or car, obtain a business loan, or get a credit or charge card. Lenders can assess your creditworthiness by the way you’ve borrowed and repaid money in the past.

Without a credit history to evaluate, you’re automatically ineligible for the best credit terms. So begin with a starter card, such as a secured credit card or a low limit unsecured card, then charge regularly.

“By using credit responsibly, consumers can go a long way in building strong and healthy credit that generally results in better interest rates,” says Lisa Westermann, assistant vice president for Wells Fargo. Just pay your bill on time and in full. Over and over again.



Fear No. 2: Online shopping

Anxious about the privacy of your personal information when purchasing from your favorite online stores? Nearly 6 in 10 Americans (59 percent) believe fraud is an inevitable part of online shopping, according to a survey by global payments provider Paysafe.

You can take steps to protect your credit card and personal information online, though. Sign up for text alerts from your card issuer so you know when your card is used for online purchases. You also may want to use virtual card numbers, which are offered by some card issuers, including Capital One, American Express and with some Citi cards.

Something else to keep in mind (and ease your anxiety about online shopping): Reputable websites employ up-to-date security and payment systems that are at least as safe as traditional retailers, says Linda Foley, founder of the Identity Theft Resource Center, a nonprofit consumer education organization.


Real concern: Fraudulent websites.

Virtual shopping is only as secure as the sites you visit. To protect your personal and financial information from “phishers” (thieves who build fake websites that mimic legitimate sites), type the business’s name into your browser rather than responding to email advertisements.

“When in doubt, find out who owns the domain name by checking them out on online,” Foley says. “If it’s registered in some other country like Nigeria, log off.”



Fear No. 3: Going credit crazy

If you overcharged in the past or know how easily you get in over your head, you may be skittish of the credit world.

Consumer debt is a major concern in the U.S. For people who don’t pay off their credit card charges every month, the average credit card balance is $9,100.

Maintain perspective, though. While it’s important to respect your personal parameters, using plastic wisely is actually simple once you get into the routine: Only charge the amount you can cover in full when the bill arrives, and pay before the due date.

You’ll never be charged a penny in interest when you charge responsibly, and you can profit from the process if you’re using a rewards card. Stick to the plan and you’ll earn points redeemable for cashgoods and services, and airline miles.

Real concern: Over-relying on credit.

If you spent too much in the early part of the month and are now short on cash for food, gas or entertainment, charge the difference. Right?


If this is your attitude, change the way you think immediately.

According to a 2017 survey, covering day-to-day living expenses is the primary reason people carry credit card debt. That means people are paying interest on all that rolled-over debt from living larger than life.

What you should do instead: Your income should be enough for all of your living costs, and if it’s insufficient, either earn more or spend less.

Treating a credit line as extra income is a guaranteed way to accumulate a large and expensive balance. Yes, you can finance a specific purchase with a card, but break the cost down into a few installments and make sure those payments are within your means.

For example, you might want to splurge on the latest mobile phone that comes with a $1,000 price tag. If you can commit to sending roughly $340 to delete the debt in three months, you’re in good shape. That’s the way to use plastic.



Fear No. 4: Asking creditors for help

Another widespread-yet-groundless fear is that asking a creditor for assistance in times of trouble will prompt immediate suspension of charging privileges, a huge interest rate increase or even a lawsuit. Or maybe the representative you speak with will be angry or mean.

Put such anxieties behind you, says Westermann. She urges stressed-out cardholders to call their credit card issuers as soon as they think they might have problems paying their bills.

Most issuers will do their best to work with you to find a reasonable solution, but you’ve got to make the call early.

Real concern: Running away from credit troubles.

While avoiding problems may be human nature, it only magnifies damage. A creditor may be willing to arrange a hardship plan in which interest and payments are suspended for a fixed period of time, but if you’re seriously delinquent, that option is unlikely to be available.

Don’t delay seeking help with your credit issues.

Todd Huettner, a Denver-based mortgage broker, recalls how he tried to help a cash-strapped client deal with his creditors.

“I explained that his lender had to be involved,” says Huettner, who said the man chose avoidance instead. “He could have worked with all of them on a solution, but by doing nothing, the debt spiral accelerated, and he has few options at this point.”



Fear No. 5: Insufficient borrowing power

If you are afraid that without a large credit line you aren’t protected against emergencies, don’t be.

Kristin Harad, president of VitaVie Financial Planning, contends that charging your way out of a disaster, even when the interest rate is relatively low, usually brings greater headaches down the line.

“If you borrow $10,000 to get through a crisis on a 10 percent to 15 percent APR credit card, you could owe an extra $1,000 to $1,600 by the end of the year if you can’t pay it back within a few months,” Harad says.

Don’t consider a credit line as a safety net for some distant crisis. Your borrowing power should be enough for you to spend on things you want without coming close to your limit.

Keeping your charges to less than 30 percent of the maximum is wise. That means if you typically charge $600 each month, an appropriate limit would be approximately $2,000. More than that shouldn’t be necessary.

Real concern: Inadequate savings, insurance coverage or both.

True financial security means having enough cash and insurance coverage to take care of unexpected setbacks.

If you don’t have at least three months’ worth of essential expenses set aside, start saving now and make sure you are properly insured.

“A bad car accident or a neighbor’s child falling down your stairs could wipe you out. For a small premium you can mitigate these risks,” says Harad.



Fear No. 6: Credit counseling

Contrary to popular suspicions, visiting an accredited credit counseling agency has no effect on a credit report or credit score. After all, it’s just a meeting with a financial professional who will review your needs and circumstances, then develop a budget and action plan.

These credit counseling sessions are usually free and the counselor will discuss the different options that will help you get back on your feet.

One caveat: If the credit counselor negotiates with your creditors on your behalf and works out a debt repayment plan, under which you end up paying less than you originally agreed, your credit report will be negatively affected.

Real concern: Credit repair clinics.

It can be tempting to do business with a company that promises to remove negative but timely and accurate data from your credit reports. Don’t fall prey.

Not only will you have to pay them (with money better spent on reducing debt or starting a savings account) but they may be operating illegally.

Signs that you’re dealing with a credit repair scam include:

  • Claims that they can do something that you can’t.
  • Fees that are expected upfront.
  • Instructions to falsify information to your creditors or the credit reporting agencies.

According to federal law – the Credit Repair Organization Act – it is illegal for credit repair companies to lie about their capabilities and to charge in advance of providing a service



Fear No. 7: Going to jail

One of the most disturbing and unfounded worries some borrowers have is that if they are unable to pay, they could wind up behind bars.

Unless you willingly committed fraud, you cannot go to jail for nonpayment of unsecured debts, such as those incurred on your credit card.

“There is no debtor prison in the United States,” says San Francisco bankruptcy lawyer Patrick McMahon. If a creditor tells you that you will face jail time if you don’t pay up, consider it nonsense.

“Sometimes collectors will make statements that are not correct. Read up on the matter, get credit counseling, see a bankruptcy lawyer,” says McMahon.

Real concern: Wage garnishment and other judicial action.

While you won’t be imprisoned because of unsatisfied credit card bills, you certainly could experience other highly unpleasant legal repercussions.

“A creditor may seek judicial relief by gaining a judgment against the debtor and then enforcing the judgment by a wage garnishment or taking bank accounts,” says McMahon.

What you owe will be higher than the original debt, too, since interest and fees will be added. And of course your credit rating will take a nosedive.

As a cardholder, you’ve got to identify which concerns are valid – then take action so they are not a worry – and put to rest those that are based on myths and irrational fears. Do so and you’ll gain the confidence necessary to use credit products to your advantage.

See related: Ignoring credit card debt can lead to garnished wages, Credit card phishing: What it means, how to prevent it, 8 steps for picking the right credit counselor

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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