The myths and the reality
Myth No. 1: Your credit card account isn't opened until you activate it using the issuer's toll-free number.

Several consumers have changed their minds about opening new credit cards after they've applied, then asked if they could undo the damage to their credit scores by not calling to activate the card.

Sorry, but the ding to your credit scores — typically 5 points or less — happens as soon as the issuer pulls your credit reports, which is usually within seconds of receiving your application. The account shows up as active on your credit reports shortly after the card is approved.

Myth No. 2: You can stop unsolicited credit card offers by sending them back in the postage-paid envelopes.

If you want to cut the number of unsolicited credit card offers you receive, you need to get off the mailing lists before they're compiled. Here's how:

Sign up with the credit card bureaus' opt-out service. This service removes you from the marketing lists they sell to credit card issuers and can be reached at 1-888-5-OPT-OUT or OptOutPrescreen.com. You'll need to provide your Social Security number and a few other pieces of identifying information.

Myth No. 3: Merchants may require identification, such as a driver's license, when you pay with a credit card.

Merchants' agreements with Visa, MasterCard, American Express and Discover specifically forbid them from requiring identification. Your signature is supposed to be enough.

Myth No. 4: You can deter identity theft by writing "Ask for ID" instead of your signature on the back.

You'll certainly deter use of your card, because merchants aren't supposed to accept one that's not signed on the back, and that could affect you as much as any thief.

Myth No. 5: No-limit credit cards allow you to buy whatever you want.

Most credit cards come with credit limits, but some cards advertise having "no preset spending limits." With high-end Visa cards, for example, customers are allowed to exceed their credit limits; with traditional American Express charge cards (the green, gold, platinum and black versions), there is supposedly no preset limit at all.

Except that all cards have limits, said Curtis Arnold, the founder of CardRatings.com and author of "How You Can Profit From Credit Cards."

"No-preset-spending-limit cards are more marketing hype than anything," Arnold said. "These cards do have a credit limit that is typically based on your income and spending patterns."

Myth No. 6: If you pay your credit cards in full and on time, you don't need to worry about your cards' effect on your scores.

Paying your balances in full is good for your wallet, and paying on time is good for your credit scores. But you can still mess up your credit even if you're diligent in doing both.

How? By using up too much of your credit limit. Your credit scores are incredibly sensitive to how much of your available credit you use, especially on your credit cards.

And the balance used for these calculations is typically the balance that shows on your most recent credit statement. So if you've charged $9,000 on a card with a $10,000 limit, your scores will reflect the fact that you're using 90 percent of your available credit, even if you pay off the balance the day you get the bill. Such a misstep can knock dozens of points off your scores.

Myth No. 7: High credit card limits are bad for your credit scores.

You certainly shouldn't ask a credit card company to lower your credit limits or shut down cards, since either action could hurt your credit scores, unless a lender specifically requires you to do so as a condition of getting a loan. Even then, you should try to keep your oldest and highest-limit cards open.

Myth No. 8: A credit card company can't change my rate unless I mess up.

Many borrowers have seen their rates double or triple even though they haven't been late with a payment or suffered any other credit setbacks.

For now, credit card companies can alter virtually any rate or term with just 15 days' notice. Their freedom to do so will be ending soon, though. In July 2010, federal regulations will kick in that ban rate increases on existing balances, except in limited circumstances, such as when a borrower skips a payment.

Myth No. 9: Rewards cards are pretty much the same.

This myth takes different forms, including "the best rebate you can get is about 1 percent" or "you have to pay an annual fee to get a rewards card" or "the rewards aren't worth the effort to redeem."

Today, the best cash-back rewards cards have no annual fee, and you should expect a rebate in excess of 1 percent. Check out "20 credit cards that pay you back" for some insight on what you may be missing.

The complete article written by Liz Weston can be found at:   http://buildingabrighterfuture.msn.com/?serviceName=article&dataId=23187568&source=email