When it comes to personal finance, myths and misconceptions are everywhere. From advice passed down through generations to viral tips on social media, it can be hard to separate fact from fiction. At National Bank of Arizona, we believe informed clients make stronger financial decisions. That’s why we’re here to bust some of the most common money myths and set the record straight.

Myth 1: Carrying a balance on your credit card helps your credit score

The Truth: Carrying a balance from month to month does not improve your credit score—in fact, it only costs you more in interest charges. What really matters for your credit health is making payments on time and keeping your credit utilization ratio low (that’s the percentage of your available credit you’re actually using). Paying off your balance in full each month shows lenders that you’re responsible with credit, and it saves you money by avoiding unnecessary interest.

Myth 2: You don't need an emergency fund if you have credit cards

The Truth: While credit cards can provide quick access to funds in an emergency, relying on them as your only safety net can quickly lead to high-interest debt that’s difficult to pay off. An emergency fund, on the other hand, gives you a financial cushion that doesn’t come with added costs. Even a modest emergency fund can help cover unexpected expenses like car repairs without putting you deeper into debt.

Related Article: How to Create a Rainy Day Fund (and Why You Need One)

Myth 3: Renting is always "throwing money away"

The Truth: Renting is often unfairly labeled as wasted money, but that’s not always the case. Rent provides you with a place to live, often with fewer responsibilities and costs than homeownership, such as property taxes, maintenance, and repairs. For many people, renting offers flexibility—whether you’re saving for a down payment, exploring a new city, or not ready to commit to a long-term mortgage. While homeownership can be a great investment, renting can be the smarter financial choice depending on your goals, lifestyle, and stage of life. 

Related Article: Renting Vs. Buying: Which is Right for You?

Myth 4: Cash is always king

The Truth: While cash is useful in certain situations, relying solely on it can limit your financial opportunities. Using debit and credit cards responsibly not only provides convenience but also offers fraud protections and, in the case of credit cards, the chance to build a positive credit history. Many cards also come with rewards or cash back programs, like our Vivid Rewards Credit Card or our Agility Cash Credit Card, that can save you money on everyday purchases. Cash doesn’t provide these benefits, and carrying large amounts can be risky.

Myth 5: Paying bills late once in a while doesn't matter

The Truth: Even one late payment can have a lasting impact on your credit score and may result in late fees or penalty interest rates. Payment history is one of the most important factors in your credit profile, and lenders want to see consistent, on-time payments. A single missed payment can stay on your credit report for years, making it harder to qualify for loans or secure favorable interest rates.

Related Article: Understanding Your Credit Score

Myth 6: If you can afford the monthly payment, you can afford the purchase

The Truth: Looking only at the monthly payment can be misleading. Lenders may stretch out loan terms to make payments look affordable, but this often means you’ll pay much more in interest over time. For example, a car loan with a longer term may lower your monthly bill but increase the total cost of the vehicle significantly.

Myth 7: Student loans don't affect your credit score

The Truth: Student loans are a form of debt, and they impact your credit just like any other loan. Making payments on time can help you build a positive credit history, while missed or late payments can damage your score and make it harder to qualify for future credit. Because student loans often span many years, they can actually help establish a long credit history if managed responsibly. Treating them with the same seriousness as other financial obligations is key to maintaining strong credit.

Final thoughts

Financial myths can lead to costly mistakes if left unchecked. By understanding the facts, you can make smarter decisions about saving, borrowing, and managing your money.

At National Bank of Arizona, we’re here to provide the tools and resources to help you cut through the noise and focus on what's important. Stay up to date with the latest financial news and insights through our blog and Financial Cents podcast.

Still have questions? Schedule a financial wellness checkup today.