The Truth About Common Financial Myths, Part 2

Welcome back to our financial myth-busting series, where we dive into the common misconceptions that impact your finances. Understanding these myths isn’t just about trivia; it’s about helping you make smarter money decisions, protect your wallet, and plan for a better financial future. Let’s get started!

And if you missed our first installment, you could catch up by reading The Truth About Common Financial Myths, Part 1.

MYTH 1: Carrying a Credit Card Balance Helps My Credit Score

Nope. This one is a major myth. Contrary to popular belief, carrying a balance on your credit card does NOT help your credit score—in fact, it can hurt it. Why? Credit scores are partly calculated based on your credit utilization ratio, which is the percentage of your available credit you are currently using. The lower your utilization ratio, the better for your score, and carrying a balance makes that harder.

For the best results, use your credit card then pay off the balance in full each month. This positively impacts your credit score and helps you avoid steep interest charges.

PRO TIP: For more help building your credit score, try the Credit Builder Secured Credit Card¹ from Academy Bank. It’s easy to qualify for, and it reports your responsible activity to all three major credit bureaus—this helps you build credit faster.

MYTH 2: Stay in a Lower Tax Bracket to Minimize Taxable Income

Ever heard someone say, "Don't earn more money; you'll end up in a higher tax bracket with less take-home pay?” Well, here's the kicker—that's not how tax brackets work! The U.S. tax system is progressive, meaning you don’t pay the same rate on all your income. If you move into a higher tax bracket, only your income above the threshold is taxed more (while the rest of your income remains at lower rate). So, go ahead, get that raise! Don’t let this myth hold you back.

MYTH 3: I’m Too Young to Start Saving for Retirement

Retirement might seem like a distant concern, especially for young adults, but starting early makes a huge difference. The earlier you start saving, the more you benefit from the power of compound interest. This means your savings grow over time because you earn interest not just on the money you put in, but also on the interest that money has already earned.

Take advantage of employer-sponsored 401(k) plans or open a Roth IRA—even if you can only make small contributions. To make things easier, use tools like a 401(k) Match Calculator, Roth IRA Calculator, and a Retirement Plan Calculator to see how your savings can grow!

MYTH 4: Credit Cards Can Substitute for Emergency Funds

Depending solely on credit cards for financial emergencies is risky. Why? If you face unexpected expenses, racking up credit card debt can lead to high-interest payments and long-term financial strain. Instead, it’s much smarter to build an emergency fund with 3-6 months of living expenses. Not only do emergency funds give you peace of mind, but they also ensure you won’t have to scramble to cover basic expenses.

PRO TIP: Learn how to calculate emergency savings with a helpful Emergency Savings Fund Calculator. Just input your monthly living expenses and find out exactly how much you should set aside for a rainy day.

MYTH 5: It’s Smart to Keep All My Money in One Bank

While it might seem convenient, relying on just one bank could mean missing out on better opportunities. Different financial institutions offer varying interest rates, unique perks, and specialized services that can work in your favor.

In addition, keeping your money in multiple banks increases your financial security. FDIC insurance only covers up to $250,000 per depositor, per bank. This means you can protect more of your money by spreading your funds across different banks. Plus, this method gives you flexibility—if one bank has issues or doesn’t meet your needs, you won’t be stuck relying on a single institution.

Academy Bank: We Know the Facts

By debunking these common financial myths, you can make better decisions and take control of your finances.

Academy Bank is here to help you make the most of your money. Whether you are looking for a high-yield savings account, HELOC² for home improvements, or expert financial advice, we care about helping you succeed.

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