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Five Financial Misconceptions With Big Price Tags

April is Financial Literacy Month, a chance to raise public awareness of the importance of understanding your finances and making smart money choices.

La Cap is celebrating Financial Literacy Month throughout April by highlighting some ways our members can help improve their financial well-being through easy-to-follow tips and habits. As a reminder, La Cap members have free access to financial education courses, videos, and other helpful materials through KOFE at

A first step to making better financial choices is knowing truth from fiction. Below are five common money myths that could be costing you big and ways to avoid falling into these financial traps.


Myth No. 1: Making the minimum payments every month is the responsible way to pay off your credit cards.

  • The Truth: Minimum payments keep you in debt longer.
  • The Downside: More payments means more added interest charges.
  • The Cost: At 15% APR, you’d pay $851 in ADDED interest on $1,000 of debt.
  • The Better Way: Devote as much money as possible for larger payments.
  • The Best Way: Pay off your balances in-full every month.


Myth No. 2: There’s no longer a need for 20% down payment on a mortgage* when you buy a home.

  • The Truth: Traditional fixed-rate mortgages require at least 20% down.
  • The Downside: Less down means higher payments with mortgage insurance (PMI).
  • The Cost: With 3% down on a $150,000 mortgage, PMI would be over $100 monthly.
  • The Better Way: Look into down payment assistance options if you have less than 20%.
  • The Best Way: The full 20% makes it easier to qualify for the mortgage you really want.


Myth No. 3: While budgeting is useful, building one is time consuming and more hassle than it’s worth.

  • The Truth: New technology makes budgeting easy by doing the work for you.
  • The Downside: Without a budget you’re flying blind with your finances.
  • The Cost: Average overdraft fees are $30 if you spend more than you have available.
  • The Better Way: See if your primary bank offers a free money management platform.
  • The Best Way: Find a secure third-party platform that can integrate all your accounts.


Myth No 4: There’s nothing wrong with running up your credit cards as long you don’t go over your limits.

  • The Truth: The amount of credit you’re using is a key factor in credit score calculations.
  • The Downside: If you’re using more than 50 percent of any credit line, it decreases your score.
  • The Cost: Interest on a 4-year, $20,000 car loan is more than $350 extra at 650 vs. 750.
  • The Better Way: Never run your credit cards up to their maximum limits.
  • The Best Way: Never utilize more than 20% of any credit line to maximize your score.


Myth No. 5: Your credit report is a factually accurate representation of your past credit history.

  • The Truth: A credit report can contain mistakes/errors that decrease your credit score.
  • The Downside: A lower credit score makes it harder to qualify for credit at good rates.
  • The Cost: Mistakes like duplicate mortgages can take up to 100 points off your score.
  • The Better Way: Review your credit report to ensure that all information is accurate.
  • The Best Way: Download your free report at and repeat this review every 12 months.


* NMLS # 411413 and Equal Housing Lender

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