Our lives are stressful enough without allowing fears about money, the future, and the unknown into our mind space. Being in the personal finance business, we speak to a lot of people and hear a lot of theories about money. Many of our readers are simply doing the best they can, while we work hard to provide guidance and support and to assuage their fears. To help you focus your energies on leading the life you want, we’ve compiled the top money myths we’ve heard. Read them, learn the truth, and put these money worries to rest.
Myth: It’s bad to check your own credit score too often.
Truth: Although it will hurt your credit if too many outside agencies (like potential lenders or landlords) request official copies of your credit report around the same time, checking your own credit score is free, simple, and easy. Simply go to Credit Karma and do it within minutes. For more info on the difference between your credit report and your credit score, check this out.
Myth: It’s bad to use ATMs because someone could be skimming your card.
Truth: People have reported scams in which ATM card readers “skim” the info from your account to gain access to your finances, but that doesn’t mean you can’t use ATMs anymore. If you find yourself a victim, your bank should reimburse the money that was lost, according to Bankrate. In the meantime, be alert by regularly checking your accounts for suspicious activity and keeping your eyes out for anyone who tries to “help” you at an ATM. Also look out any machine that doesn’t look quite right or for unusual signage that tells you to swipe in a different sort of way. If your card isn’t returned immediately after your transaction or after you’ve pressed cancel, tell your bank right away.
Myth: It’s better to use cash than credit cards so you can stay on top of your spending.
Truth: LV actually recommends making purchases via credit card because statements let us review all of our spending in one, consolidated place. Plus, credit cards offer protections like insurance for purchases, travel insurance, and the ability to dispute charges. We only recommend going cash-only if you have trouble controlling your spending. If so, your first order of business is to delve into yourself and gain control over the way that you treat money.
Myth: You shouldn’t make deposits to an ATM because the machine is less trustworthy than a human is.
Truth: Humans can make errors, too. Either way, it’s your bank’s responsibility to resolve the discrepancy. Pay close attention as you make your transactions and immediately report anything that goes amiss. Your bank is obligated to investigate the issue, so make sure that you have all necessary dates, transaction numbers, and pertinent info.
Myth: You should try to pay off student loan debt as soon as possible.
Truth: The most urgent debt is the kind that charges the highest interest rates. Although $30,000 in student loans may feel like a lot—and you might be tempted to hack away at it as soon as possible—it’s more important to address that $500 in credit card debt first. Here’s why: if, say, that $500 in credit card debt charges an interest rate of 15 percent, and your students loans have an interest rate of 6 percent, you’re losing money much faster from the credit card issue. That’s where you should focus your energy first.
Myth: If you want your money to be safe, you shouldn’t gamble it on the stock market.
Truth: This is true, in part. Investing in the stock market comes with real risk, and there is a chance you could lose funds if that’s where you put your money. At the same time, if you’re saving over the long haul, the “safest” place to put your money isn’t necessarily in a bank account. Over the years, inflation has tended to average about 3 percent, meaning that your money loses that much of its value every year. If your savings account is providing you with a mere 1 percent, you’re actually losing money because you’re not keeping up with inflation.
