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We’re not exactly sure how some debt myths have circulated their way into popular thinking, but one thing is for sure – we’re here to stop these debt myths in their tracks.  Whether you think it’s smart to use your retirement savings to pay off your credit card debt or think that credit card rewards are worthwhile, it’s time to reveal the truth, one little debt lie at a time:

Using Your Retirement Savings To Pay Off Debt.  Whatever you do, do NOT touch your retirement savings to alleviate any credit card debt.  You should do everything possible to make sure that your retirement nest egg is untouched – and this means resisting the temptation to withdraw from your pension or 401(k) fund to kiss your credit card bills good-bye.  Use your regular savings to pay off any debt, but make sure you won’t charge up a large balance again – that’s a great way to get yourself into even more financial trouble!

Reward Cards Are A Great Value.  How many of us actually use our rewards frequently enough to warrant a rewards card?  The simple truth is that we’re charged more for these “rewards” in the form of larger finance charges and interest rates; additionally, with many consumers not even making the effort to claim their rewards, it’s just another way to flush your hard-earned cash down the drain. 

Bottom line: unless you can’t live without your rewards, get a card with a low-interest rate instead – your bank account balance will thank you for it!

Perfect Credit Will Solve All Of Your Financial Problems.  Ah, perfect credit.  It seems like the holy grail of the financial world, doesn’t it?  However, it’s important to remind yourself that credit is harder to come by thanks to the recession, even if your credit score is “perfect”.  This is due the reluctance of lenders to lend, despite the fact that many people have demonstrated their financial responsibility even in the midst of the recession.  So don’t fuss over a few points on your credit score right now – in the middle of this recession, you should just focus on getting that emergency fund up and running and your debt paid off.

Close Any Old Credit Card Accounts.  Before you close down that old account, stop!  Once upon a time, financial experts believed that old credit card accounts just dragged down your credit score; however, a major part of your credit score is made up of your available credit to used credit ratio.  In other words, the more available credit you have, the higher your credit score will be.  Closing those old accounts will only shrink your credit to debt ratio, which means a lower credit score.

Yes, these popular debt myths have been around for quite some time – and chances are they’ll be around for a little while longer.  Yet if you want to be smart with your finances, don’t fall for any more debt lies; instead, give yourself a financial education so you won’t be fooled again!