5 Common Banking Myths Debunked

When it comes to banking, there are a lot of rumors that get passed around. However, many of these are either untrue, or misrepresent the truth. In this blog, we’ll explore some of the most common bank myths, and the truth behind them.

1. You Need to Carry a Balance on Your Credit Card to Build Credit

For whatever reason, many credit card users believe they need to maintain a balance on their card in order to build credit. However, this is a common misconception. You can build a good credit history simply by paying your credit card balance in full each month. Maintaining a balance doesn’t benefit your credit score but can create an unnecessary risk of incurring interest charges.

2. Closing a Credit Card Helps Your Credit Score

On the topic of credit, it’s important to note that closing an older credit card doesn’t help your credit score. In fact, it does quite the opposite and can potentially hurt your credit score. Closing a card reduces your credit history length and increasing your credit utilization ratio. So, even if you have an old credit card you don’t use often, it’s better to keep it open.

3. Using a Debit Card Builds Credit

Debit cards are usually used by most as a ‘starter card’ to use before opening their first credit card. While using a debit card can help build good payment practices, it doesn’t do anything to improve your credit score. Debit card transactions are linked to your bank account and do not impact your credit score. Building credit typically requires using credit cards or taking out loans and making on-time payments. If you are interested in ways to actually improve your credits score, read our dedicated blog on the topic.

4. Mobile/Online Banking Puts Your Security at Risk

Although phishing and fraud is widespread, the myth that online or mobile banking puts you at more risk financially is categorically untrue. In fact, the weakest point in the armor of your accounts is you, which is why scammers directly target the account owner instead of trying to access the account on their own.

Banks implement strict security measures that help to protect your finances when you bank online or through a mobile app. If you’re looking for extra steps you can personally take to secure your accounts, check out our blog on simple ways you can secure your finances.

5. Banks Do Not Offer Investment Services
While some consumers may think they need to take their business elsewhere for investment services, this is not always true. Some banks offer investment services in addition to savings accounts, certificates of deposit (CDs), and other tools and resources to help you plan for your future. At Pioneer, we’re More Than a Bank, and our experienced financial advisors can help you dream more while planning for your future. To learn more about Pioneer Wealth Management’s* process and offerings, visit our website.

While there are many myths about what affects your credit score, how banks operate, and how cards work, we hope we were able to dispel some of the most common ones in this blog. As always, if you are a Pioneer customer and have a question about how something works, feel free to stop into a branch to ask one of our team members, or contact our Customer Care Team at 518.730.3000 who will be happy to help you!

The material provided on this website is intended for informational purposes only. Links to other web sites are provided for reference and do not constitute a referral or endorsement by Pioneer or its affiliates. Please note that such material is not updated regularly and that some of the information may not be current. It is recommended that you consult with a financial professional for assistance regarding the information contained herein.

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates. Pioneer Bank and Pioneer Wealth Management are not registered as a broker-dealers or investment advisor. Registered representatives of LPL offer products and services using Pioneer Wealth Management, and may also be employees of Pioneer Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Pioneer Bank or Pioneer Wealth Management. Securities and insurance offered through LPL or its affiliates are: 

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