Credit Scores and Reports

5 credit card urban legends and why we fall for them


A magical way to erase debt, the debt collector who wants $0 and battling Osama with your plastic — all urban legends that prey on our weaknesses

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5 credit card urban legends and why we fall for themUrban legends — those oft-repeated stories that sound just wild enough that they could be true, but really aren’t — prey on our fears, hopes and dreams. Those involving credit cards are no exception.

These five larger-than-life tales about plastic from urban legend site provide entertaining insight about the psychology of money and even a few financial lessons.

Urban legend No. 1: The secret trick for ditching debt

The urban legend: A friend of a friend has racked up $100,000 in debt by charging dinners in fancy restaurants, shopping sprees and luxury vacations on her credit card. But she plans to quickly wipe out her debt — on the advice of a lawyer friend — by simply writing $10 checks to her creditors with the notation “paid in full.”

What it reveals: We’re all prone to some wishful thinking about debt. “It’s preposterous, but people think, ‘Wouldn’t it be great to be able to do this?'” says Kathleen Gurney, a licensed psychologist who specializes in money management issues. “Because every once in a while you hear about something crazy somebody did that actually worked — it’s like the lottery.”

The lesson learned: Settling credit card debt for pennies on the dollar can be done, but it’s never easy — or free from repercussions. “The creditor would have to approve it first, and you’d have to show you’re in serious financial distress,” says Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling. “Then it would show up on your credit report.”

Urban legend No. 2: The story of the creditor from hell

The urban legend: A man got a new credit card and soon began receiving statements that showed he owed $0. He kept throwing them away. The credit card company sent him a letter threatening to close his account if he didn’t pay his $0 balance. When he finally wrote a check for $0 and sent it, the credit card company notified him it had bounced and threatened to send the debt to collections.

What it reveals: “People want to think that creditors are bad and annoying and frustrating, so the fact that this guy was incessantly hounded is perfect — it plays right into what they want to believe,” says Belinda Fuchs, CPA and president of

The lesson learned: Checking your statements — and calling your creditors to talk out any concerns until they’re resolved — is important and will eventually yield results. “It’s a good thing to stay on top of any issue with your credit,” Cunningham says. “Sometimes you’ve just got to be dogged and stay after it.”

Urban legend No. 3: Battling evil with your credit card

The urban legend: Someone’s mother-in-law got a letter stating that Osama bin Laden is a “principal owner” of Citibank. The phone number of Citibank is provided so the reader can supposedly call to verify. The e-mail states: “For any of you that have a Citi credit card — DON’T USE IT! Osama is counting on our money.”

What it reveals: We want to control the big things that scare us, and our purchasing and credit decisions offer a small way to wield influence in a big world. “You might think, \u2018I’ll cut this card up,’ then you feel powerful and in control,” says Eddie Reece, a psychotherapist who specializes in financial issues. “People are afraid and uncertain, so if you sell them certainty, they’ll buy it.”

The lesson learned: You do have power through your spending and credit decisions, but shouldn’t make knee-jerk decisions based on untrue rumors. “Some of the information out there is certainly not credible, and to be a savvy consumer, you need to do your own research,” Cunningham says.

Urban legend No. 4: The sneaky credit card scam

The urban legend: A friend goes to the gym and leaves his belongings in a locker. After coming back out, he flips through his wallet to make sure it’s in order. A few weeks later, he gets a credit card bill for a whopping $14,000. Turns out, a thief had broken into his locker, swiped his credit card and replaced it with a similar-looking expired card. The victim gets stuck with thousands of dollars in fraudulent charges.

What it reveals: We love to scare ourselves silly about possible credit card scams — even unlikely ones. “Credit cards are very personal,” says identity theft expert Robert Siciliano. “The mere thought of a thief invading your 16 digits and the big bad bank being uncooperative makes for a great soap opera.”

The lesson learned: It’s good to be cautious because scammers are always coming up with new tactics — many that are far more believable than the card switcheroo at the gym — but remember that credit cards have many protections in place, including 60 days to dispute charges and a limit of $50 liability for fraudulent charges. “You can’t be too careful with your credit cards and your identity,” says Gurney. “But there’s no need to be fearful.”

Urban legend No. 5: The magical credit card for the super rich

The urban legend:American Express has a super secret “black card” offered by invitation only to extremely wealthy individuals such as Bill Gates. It can be used to buy literally anything — from a luxury car to a jet. It’s delivered by a security guard and comes in a velvet-lined box.

What it reveals: Many of us not only want to be rich, we believe that one day we will. “I can tell this story like, \u2018Oh can you believe these rich people?’ or I can tell the story of this awesome card that secretly I might even one day have,” Reece says. After the urban legend had circulated for years, American Express tried to capitalize on it by offering the Centurion Card, which is black in color and has an annual fee of $2,500 and offers many perks — but doesn’t come close to the magical card of the legend.

The lesson learned: Rich or not, now is the time to learn how to manage your money. “If you don’t get a system down, you might generate money in the future, but then lose it because you’re not capable of handling that much money,” Fuchs says. “If you own your money and plan your financial future, that’s much better than waiting for a velvet box to arrive at your door.”

So, next time an urban legend about money or credit shows up in your inbox, remember not to take it too seriously — and instead use it as a little reminder to manage your finances wisely.

See related:Debt in collections: Do you settle or pay in full?, 4 keys to credit, debit card zero-liability policies, You’ve arrived! True tales of the mysterious Black Card

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Credit Card Rate Report Updated: September 16th, 2020
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