Credit cards are the building blocks of many people’s financial lives, but they’re often misunderstood — and misused. People often have very strong opinions about them, which are normally based on hearsay, a bad personal experience or myths perpetuated through the generations. Such misunderstandings can be costly, causing you to miss out on valuable benefits or worse, managing your credit in a manner that harms your financial future.

Now, it is time to distinguish fact from fiction. Let’s bust seven of the most popular and harmful credit card myths once and for all.

Myth 1: Paying Interest is Required in Order to Establish Credit

The Myth: Carrying a balance on your credit card, month to month shows credit bureaus you can handle paying interest and demonstrates that you’re a good borrower.

The Real Deal: This is probably the most prevalent and costly credit card myth of all. You do not benefit your credit score by carrying a balance, and it costs you money in interest.

Your credit score is determined by how you run your payments and usage of available credit — not the interest rate you pay. The most important thing you can do is pay your full statement balance each month by the due date. This demonstrates that you can borrow responsibly, without racking up expensive interest charges. The banks and credit bureaus look at a paid-in-full account just as favorably as one with a balance, and you get to keep your hard-earned dough.

Myth 2: Your Score Will Be Lowered If You Check Your Report

The Myth: Whenever you check your credit, it’s a “hard inquiry” that dents your score.

The Truth: There is a world of difference between a soft inquiry and an hard inquiry.

A Soft Inquiry is when you access your own credit report, an employer checks it (with permission) or a bank pre-approves you for an offer. Soft pulls do not affect your credit score at all. You should be regularly checking your credit report for errors and evidence of fraud.

A Hard Inquiry (or “hard pull”) occurs when a lender review your credit report after you apply for new credit, such as a loan, mortgage or credit card. One hard inquiry can temporarily decrease it by a few points, but the effect is minor and short-lived.

The Bottom Line: You should monitor your credit report periodically at annualcreditreport. com or your bank’s services. It is a free and innocent habit, after all, that has the potential to create financial health.

Myth 3: Close Old Cards You No Longer Use Fact: Closing Old Cards Can Hurt Your Credit Score

The Myth: If you want to straighten up your financial picture and get rid of temptation, you need to close those old or unused credit card accounts.

The Truth: Shutting down an old credit card can, in fact, damage your credit score in two important ways:

It Shortens Your Credit History A big part of your score is the average age of all your accounts. Close your oldest card, however, and you reduce that average in a big way — which means it looks like your credit history is younger.

It Improves Your Credit Utilization: Your credit utilization is the ratio of how much credit you’re using compared with your total available credit. Closing a card, for example, could lower the amount of credit you have available in your total budget and cause your utilization ratio to jump even if you never charge another cent.

If the card doesn’t have a high annual fee that fails to make up for its benefits, it’s generally better to keep the account open. In order to keep the issuer from closing it because of inactivity, make a small but recurring subscription purchase every few months and put it on autopay.

Myth 4 – Debit Cards Are More Secure Than Credit Cards

The Myth: Since the debit card is attached directly to your bank account, it’s more secure and keeps you from getting into debt.

The Reality: Credit cards are far safer than debit cards when it comes to fraud protection. Under federal law, your liability for unauthorized credit card charges is capped at $50, and most issuers offer $0 liability policies. And since, crucially, while the bank investigates you haven’t actually lost any of your money.

But with a debit card, a thief is draining your checking account. And although you’re also protected from this fraud, it might take days or weeks for the bank to replace your stolen funds — potentially stranding you without rent and bill money in the meantime.

Myth 5: You Have to Be Debt-Free to Get Credit Card

The Myth: If you have debt, such as student loans, you won’t get approved for a credit card.

The Truth: You don’t have to be totally debt-free. Credit card issuers consider your full financial profile, including the ratio of your debts to your income and — most critical — your history of paying bills. In fact, you are a reliable borrower if you have student loans or a car loan and you’ve always paid on time. The secret is to demonstrate that you can handle multiple types of credit responsibly.

Myth 6 – You Only Have to Pay the Minimum Payment.

The Myth You’re good: As long as you are paying the minimum, you are in your almighty glory and handling your debt well.

The Reality: That’s exactly what credit card companies want you to think. Minimally paying back debt is the slowest and costliest way to settle up. Most of the money you pay goes toward high interest, with very little coming off your principal. Carrying a balance with minimum monthly payments can make no more than a small purchase into a mountainous long-term debt. Always make sure to pay more than the minimum — ideally, that will be the complete statement balance.

Myth 7: It’s Smart to Apply For Multiple Cards at the Same Time

The Myth: When you “rate shop” for the best credit card offer by opening multiple in a short time span, it will count as one inquiry.

The Truth: This is true in part with some loans. If you’re rate shopping for a single auto loan or mortgage and want to minimize the impact on your score, it’s smart to do so within a 14- to 45-day window (depending on the type of credit score) so your inquiries get grouped (inquiries made in a short amount of time can actually be counted as one).

This is not true for credit cards, however. Every credit card application will incur a hard pull. Submitting multiple applications within a short period is a flashing neon sign to lenders that you are in dire straits or biting off more debt than you can chew, which, either way is going to have a negative impact on your score.

The Bottom Line: The More You Know, The Better off You’ll Be!

Credit cards are neither good nor bad — they are financial tools. Their effect — good or bad — is all in how you use them. Busting these myths can help you transition from fear and misunderstanding to confidence in knowing when your body is working the way it should be.

Be smart with your card: pay it off in full each month, use as little of your credit limit as possible and don’t sign up for too many cards at once. And when you do, you can turn your credit card from a potential debt trap into an awesome tool for rewards, protection and a great credit score.