With it being National Credit Card Education Month, money.co.uk credit card experts have delved into all the credit card misinformation circulating around, from social media or misleading information, in order to bust those myths!
They surveyed 2000 respondents, from all different generations, to find out where they get their financial advice/information from and how financially literate they are when it comes to credit cards specifically.Key takeaways:
- An alarming 55% of 16-24 year olds say they have received incorrect financial information on social media
- 36% of 16-24 year olds (Gen Z) get their financial information from social media
- Over a quarter of Gen Z use TikTok for financial tips and advise
- 35% of 16-24 year olds are not confident in their financial knowledge
- 51% of people say they feel they need to learn more about finances
- The most financially confident age group is those aged 45-54 (84%).
- The biggest credit card myth is ‘increasing your credit card limit will affect your credit score’, with 28% of people believing it’s true
Most believed credit card myths:
1. Increasing your credit card limit will affect your credit score (28% of Brits wrongfully believe this).
Increasing your credit card limit can be done for many reasons, from cash flow issues to simply getting a new job with a higher salary. As long as you pay off the full amount on time, having a higher credit limit shouldn’t negatively affect your credit score.
2. Having multiple credit cards will damage your credit score (25% of Brits wrongfully believe this)
It’s how you manage your credit cards that affects your credit score, not necessarily how many you have. Having multiple cards won’t automatically mean a lower credit score as long as you pay them off on time; In fact, often having lots of cards and managing them well can lead to an increased credit rating.
3. Checking your credit score impacts it (18.2% of Brits wrongfully believe this).
Checking your credit report doesn’t affect your score. It will show on your report as a soft search each time you check, but this is only seen by you and nobody else.
YouTube is the most used social media platform for financial advice overall, with 49.7% of people saying they get advice, tips, or information on there. For 16-24 year olds, TikTok is the most used platform, with 53.3% of them using it for financial tips. Over 60% of people said they use social media for advice because it’s easily digestible.
Salman Haqqi, credit card expert and money.co.uk spokesperson says:
“TikTok videos offering financial hacks are a worrying new trend, as many influencers with millions of followers take to the social media platform to give unsolicited advice. Personal finance TikTok, also known as #FinTok or #StockTok has become an immensely popular section of the app, where so-called ‘experts’ make videos on everything from how to get out of debt, to investing for your future.
“Although it’s great to see young people taking an interest in their personal finances, it would be wiser to go to verified sources such as your bank manager or an investment expert, or simply read books on the matters of investment and debt management, than go to TikTok ‘gurus’ and watch their unverified videos.”