6 Credit Card Myths That Hurt Your Credit

Credit cards are one of the most misunderstood financial tools in South Africa. Because so much advice is passed around by word of mouth, plenty of cardholders make decisions based on half-truths, and those decisions can show up later on a credit report. Here are six common myths, what is actually true, and what to do instead.

Myth 1: Carrying a Balance Improves Your Credit Score

This is probably the most expensive myth of all. Some people believe that leaving a balance on the card from month to month proves to the credit bureaus that you are an active borrower. It does not work that way. The bureaus, such as TransUnion, Experian and XDS, look at how you handle your accounts, including whether you pay on time and how much of your available limit you are using. They do not reward you for paying interest.

Revolving a balance simply means you pay interest to the card issuer, and a high balance relative to your limit can actually count against you. If you can, pay the full statement balance each month. If you cannot, pay as much as you can above the minimum, and check the current interest rate and fee structure in your card agreement.

Myth 2: Checking Your Own Credit Report Lowers Your Score

Many people avoid looking at their credit report because they fear it will damage their record. In South Africa, you are entitled to request a free credit report from each registered credit bureau at regular intervals under the National Credit Act (NCA). Checking your own report is a consumer enquiry, and it is not the same as a lender checking your record because you applied for credit.

Reviewing your report is actually one of the smartest habits you can build. It lets you spot accounts you do not recognise, incorrect defaults, or signs of identity theft early. If you find an error, you can lodge a dispute with the bureau and the credit provider concerned. For more on understanding what lenders look at before they say yes, see our guide on 7 things to check before you take out a loan.

Myth 3: Paying the Minimum Is Perfectly Fine

Paying the minimum amount due keeps your account in good standing for that month, and that is the only thing it reliably does. Because the minimum is usually a small portion of the outstanding balance, the debt can take a very long time to clear, and interest keeps accruing on what remains. Over time, you can end up paying back far more than you originally spent.

What to do instead

• Set up a debit order for the full statement balance if your budget allows.
• If you cannot manage the full amount, set a fixed higher payment that you commit to each month.
• Read your statement to see how long it would take to clear the balance at the minimum payment, where your issuer shows this.

Understanding how interest builds on debt works in your favour or against you. Our article on how compound interest actually builds wealth explains the same principle from the saver's side.

Myth 4: A Higher Credit Limit Means You Should Spend More

A credit limit is the maximum a bank is willing to lend you on the card. It is not a spending target and it is not extra income. Treating a higher limit as spare money is a common route into unmanageable debt. Under the NCA, credit providers must assess whether you can afford the credit they offer, but affordability assessments are only a starting point. You are the one who knows your real monthly obligations.

A useful habit is to decide your own personal spending ceiling that sits well below the limit. Using only a modest share of your available credit is generally viewed more favourably than running a card close to its maximum. Whether to ask for a limit increase is a decision to make carefully, and any increase is always at the issuer's discretion.

Myth 5: Closing Old Cards Always Helps Your Record

It feels tidy to cancel cards you no longer use, and many people assume fewer accounts means a healthier profile. In reality, the effect depends on your situation. A long-standing account with a good payment history contributes useful information to your record. Closing it can reduce your total available credit, which may make the balances on your remaining cards look larger by comparison.

That said, an unused card is not free of risk. Some cards carry monthly or annual fees, and a dormant card can be a target for fraud if you are not monitoring it. Weigh these points:

• Check whether the card has a fee you are paying for no benefit.
• Consider whether a no-fee or low-fee product could replace it.
• Ask your bank how closing the account would be recorded before you decide.

If fees are your concern, our guide to 7 bank fees you should never pay is a good companion read.

Myth 6: Applying for Lots of Cards Will Get You the Best Deal

Some consumers believe that applying to several banks at once is a clever way to compare offers. Every time a lender checks your record because you applied for credit, that application can be noted on your credit profile. Multiple applications in a short period may signal to other lenders that you are seeking a lot of credit at once, which some may view as a risk indicator.

Whether a bank approves you is always the issuer's own decision, based on its criteria, and no one can guarantee an outcome. A better approach is to compare products first using the information published by banks such as Absa, Standard Bank, FNB, Nedbank and Capitec, then apply only for the card that genuinely suits your needs. Look at the interest rate, monthly fees, rewards structure and any conditions on benefits, and always confirm current figures directly with the provider.

Building Healthier Credit Habits

Now that the myths are out of the way, here are the habits that genuinely support a sound credit record:

1. Pay on time, every time. Payment history is one of the most important things lenders look at. A debit order can help you avoid missed payments.
2. Keep your usage modest. Try not to run your card close to its limit.
3. Review your reports regularly. Use your free entitlement to check for errors or unfamiliar accounts.
4. Keep an emergency buffer. A savings cushion means a surprise bill does not have to go on the card. Our guide on how to build an emergency fund from scratch shows how to start.
5. Know your rights. The NCA gives you protections around reckless lending, disclosure and dispute rights. The National Credit Regulator publishes information on how to use them.

A Word on Risk and Responsibility

A credit card is a loan, and like any loan it comes with costs, conditions and risks. It can be a convenient and useful tool when managed carefully, and it can become a burden when it is not. Nothing here is a promise that any particular habit will lead to a specific credit outcome, because lenders and bureaus use their own methods and those methods can change. If you are struggling with repayments, speak to your card issuer early, and consider contacting a registered debt counsellor for independent guidance.

Before you apply for or change any card, read the full agreement, ask questions about anything unclear, and verify the current interest rates, fees and benefits with the official provider. Informed choices, made calmly and without pressure, are the surest way to keep your credit record in good shape.