7 Common Credit Card Myths in India, Busted

Last reviewed: October 2026

Ask five people about credit cards and you'll hear five different warnings. Some are true, many are credit card myths. Believing them can make you avoid a useful tool or use it the wrong way. Here are seven common credit card myths in India, and the facts behind them.

Myth 1: "A credit card will make me overspend"

Fact: A card doesn't make you spend, habits do. A credit card can actually help you track spending, because every transaction shows up in your app and statement.

Set a monthly budget, turn on spend alerts, and pay the full bill every month. If you know you tend to overspend, start with a low limit.

Myth 2: "Paying the minimum amount due is enough"

Fact: Paying the minimum only keeps you from a late fee. You still pay interest on the rest, often around 3–3.75% a month, and you lose the interest-free period on new purchases. Read more about the minimum amount due trap.

Myth 3: "A higher credit limit is bad"

Fact: A higher limit, used carefully, can help your credit score. Your credit utilisation (how much of your limit you use) is an important part of your score. Spending ₹20,000 on a ₹50,000 limit is 40%. The same spend on a ₹1,00,000 limit is 20%.

Many experts suggest keeping utilisation below about 30%. It's a rule of thumb, not a hard line: the lower the better.

Myth 4: "Having more than one credit card hurts my score"

Fact: Owning several cards is fine if you pay every bill on time. What can hurt is applying for many cards in a short time, because each application usually adds a hard enquiry to your credit report.

Two or three well-chosen cards can even help: more total limit means lower utilisation, and you can pick cards that suit different spends.

Myth 5: "I should close cards I don't use"

Fact: Think twice before closing an old card. Closing it:

• removes its limit, which can push your utilisation up, and
• can make your credit history look shorter over time.

If a card has no annual fee, it's often better to keep it and use it for a small spend now and then. If it charges a fee you don't want to pay, closing it is fine. Under the RBI's credit card rules, the bank must close your card within 7 working days of your request once your dues are paid, or pay you a penalty for the delay.

Myth 6: "Cards with no annual fee don't give good rewards"

Fact: This used to be truer than it is now. Several lifetime free cards give decent cashback or rewards, and many paid cards waive their fee if you spend a certain amount in a year. Compare the rewards you'll actually use with the fee. See our list of lifetime free credit cards.

Myth 7: "Checking my own credit score lowers it"

Fact: Checking your own score is a "soft" enquiry and doesn't lower it. Only lenders' checks when you apply for credit (hard enquiries) can have a small effect. Check your score regularly to spot mistakes or fraud early.

The bottom line

Most credit card myths come from people who didn't pay in full or didn't understand how cards work. Use your card like a debit card, pay the full bill on time, and keep an eye on your utilisation. Then a credit card works for you, not against you.

Ready to pick the right card? Read how to choose the right credit card or compare credit cards on PaisaSimple →

Sources

• RBI Master Direction – Credit & Debit Cards (2022, amended)

Disclaimer: This article is for general information only and is not financial advice. Credit scoring models are set by each credit bureau, and card terms vary by issuer.