Count up the number of credit cards you carry and see how you compare with the average consumer. According to Experian Consumer Direct, an arm of one of the big three credit reporting agencies, you're a card-carrying average American if you hold four credit cards - – any more could create havoc with your credit score. You're definitely in the majority if you have at least two.
Can you have too many credit cards? The short answer is yes. Credit has never been more accessible than it is today. Pre-approved credit card applications are now routinely sent to children ? usually by mistake. You can also get credit card approvals almost instantly over the Internet. Before you know it, you could have five or more cards in your wallet.
An industry expert has warned that while it can be useful for consumers to have a number of different credit cards for difference financial purposes, it can also end up being confusing and lead to debt. Not having a lot of credit cards decreases your worry of late fees as it is easier to remember your payment dates. A person with 15 or more cards probably has a difficult time remembering when all of them are due.
A recent survey carried out by the Consumer Credit Counselling Service (CCCS) revealed that Britons typically had the most credit cards of any European nation. A spokesperson explained that some people used one credit card for work, another for purchases and a third with a low balance transfer rate. The UK has "a far more liberal approach to credit" than many other nations.
So, how many credit cards should you have? Most experts say there's no single magic number. Rather, the question can be answered by scrutinizing how much you spend and how much you can pay off However, what you can afford at present may change now that most credit cards are increasing their minimum payments.
Just remember that the street of credit fairness runs only one way, and it's in the favor of the creditors. Credit card companies can change interest rates at any time. The most important thing to remember is that you are responsible to keep up with your bills and stay on top of your credit.
Some people go mad at Christmas or the sales and open numerous store cards to take advantage of 10% - 15% of their purchase. In essence, that's not a bad idea if you pay off the balance straight away and close the account. If you don't do this you will be costing yourself more money in the long run when your credit score is not how it should be. Each time you open a store card 20 points are taken off your credit score.
Having more credit and more credit cards does not necessarily make a good rating. The key factors are job stability, paying as agreed and paying on time. Keeping up with payments will build a better credit rating than opening numerous credit-card accounts. Don't close your oldest accounts if you find a better card. If you close a card you opened in college 10 years ago because you found a better card, creditors will penalize you, because they are looking for a lengthy and successful credit history. Some debt advisers also warn not to close too many cards at once. It will cause your debt-to-credit ratio to fall. For example, if you have $10,000 of potential credit and a $5,000 balance, you are using 50% of your potential. If you shut down a card with a $2,500 balance quickly thereafter, you will have $5,000 of debt and only $7,500 of potential, upping your ratio to 67%.
Helen says: Used appropriately, a credit card is a safe way to buy goods -- the money is not taken out of your account before you are able to dispute the charge. Other forms of payment have less protection
