There is a lot of information out there about credit cards and their use. Naturally, some of it is true and some of it is false. This much is clear. What’s difficult is separating the fact from the fiction, and as laws, fees and consumer credit card rights change, it becomes harder and harder to make this distinction. Therefore, we decided to investigate five of the most widespread and important credit card myths and set the record straight. After all, it’s said that the truth will set you free, so hopefully, the truth about credit cards will free you from debt, delinquency and a bad FICO score.

Myth #1: Business credit cards should always be used for business purchasing

Among the many consumer protections instituted by the new credit card law (CARD Act) are rules prohibiting credit card companies from applying an increased interest rate to an existing balance held on a personal credit card until a customer becomes 60 days delinquent. Because this regulation does not apply to business credit cards and credit card companies routinely raise interest rates in order to quickly increase profits, it’s now dangerous to carry a balance on a business credit card. Therefore, personal credit cards should be used for any business purchases that will lead to a balance at the end of the month.

The falsity of a related myth makes the above advice particularly important for small business owners. Many people think that the best small business credit cards protect them by placing much of the liability for misuse on their companies rather than on them as individuals. However, banks do not view small businesses as being large enough entities to warrant this type of limited liability and therefore hold both an individual owner and his or her business liable for things like debt, delinquency, and default.

Myth #2: Debit cards provide greater fraud protection than do credit cards

It’s unclear what reasoning lies behind this misconception, but it’s more than likely rooted in the fact that credit card use has historically been more prevalent than debit card use and therefore more people have experienced credit card fraud. In reality, however, not only do credit cards provide an equal level of fraud protection as debit cards and prepaid cards, but they also make fraud simpler to deal with.

Don’t believe me? Then let’s get hypothetical. Say you have a debit card and someone gains unauthorized access to your account and clears it out. You don’t notice they’re missing before you mail your child’s college tuition check because funds are instantly removed from a debit card account. The check bounces, and you now have more to deal with than simply sorting out the fraud with your bank.

Substitute a credit card for a debit card in the exact same situation. Since you receive a bill for your purchases that you don’t have to pay for at least 28 days, you notice the fraudulent charges, dispute them and have them removed from your account before they can negatively affect other aspects of your finances. Crisis averted.

Myth #3: Some credit cards allow unlimited spending

Consumers with excellent credit often open No Preset Spending Limit (NPSL) cards like Visa Signature credit cards, World MasterCard credit cards and American Express charge cards thinking that they provide unlimited spending capabilities. However, this common belief is actually false. No charge card or credit card allows limitless spending.

Still, it’s no surprise that consumers believe this to be true. Credit card companies refuse to release their NPSL cards limits to either users or credit bureaus because they want to protect this lucrative myth. Not only is this inherently deceitful but it also increases the likelihood of both a user’s card getting declined and his or her credit standing being compromised.

Myth #4: Leaving a small balance each month helps my FICO score and increases the likelihood that my credit card company will give me a higher credit limit

For some reason, many consumers have come to the conclusion that paying their balances in full each month is viewed negatively by credit card companies. These people believe that issuers dislike customers who completely pay down their debt each month because it precludes them from charging interest. Therefore, by maintaining small balances consumers are gaining the favor of their issuers, which they believe will ultimately result in higher credit limits and good FICO credit scores.

Myth #5: My credit card will only benefit my credit score if I use it

Credit cards are such apt tools for credit improvement because information about their use is relayed to the major credit bureaus on a monthly basis. Having positive information reported about the way in which you use your credit card either helps diminish the prominence of past missteps or provides a responsible track record where no experience existed previously. Though the greatest benefit will be garnered by using a credit card and paying for purchases on time and in full each month, simply maintaining an open credit card at zero balance helps as well because not using available credit is an important tenet of responsible credit use.