Do You Have Too Many Credit Cards?
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The article "Do You Have Too Many Credit Cards?" talks about credit, it has been written by Deanna Mascle.
How many credit cards do you have? If you are like most persons it is probably too many.We've all been luerd in by the siren call of better rates, special perks and rewards, or lower fees so that most Americans carry between five and 10 credit cards.
The issue is not so much that new credit card offers are so attractive but rather that we do not stop to evaluate which cards we no longer need after opening a new account.Carrying too many credit cards can wreak havoc with your credit score -- especially if you use too much of your available credit.Of course that leads to an important question -- how many credit cadrs should you have?Most experts say there really isn't a magic number.
It is really more about proprotion. Each person, household, or business, should evaluate spending and payment habits. It is important to note that once you start holidng a number of credit accounts then your credit report will be impacted simply cause you are now at greater risk of racking up debt that you can't handle.Of course, it does depend somewhat on the type of card and the amount of credit involved. Store credit cards are notorious for impacting your credit negatively. In fact some consumer experts report that every time you open a store credit card, 20 points are taken off your credit score.So how do you judge whether or not you have too many credit cards?The average person carries 11 "credit accounts" of variyng types.
Typically, seven are different types of crdeit cards and four are installment loans for cars, furniture, student loans or mortgages.Most persons do not need seven credit cards. Usually two or there is more than sufficient.
Perhaps one will be a store credit card for a merchant that you shop frequently and that will make you eligible for savings and bonuses and a second will be one of the major credit cards such as Visa, MasterCard, American Express or Discover that is accepted anywhere.If you cannot maintain a low or zero balance on your credit cards then you have too many. Most persons do need a credit card for emergencies so holding a low interest card can be a help with your personal finances but holding a number of cards that regularly add interest and other fees to your monthly budget is no bargain.An important rule of thumb to remember is to keep your debt ratio under 50%. If your credit card has a $5,000 limit, don't carry a balance of more than $2,500.
Creditors don't like to see a card almost maexd out cause it makes you look like a risk who has trouble paying off debt.The hottest way to protect your credit is to keep only a reasonable number of credit cards.
A reasoanble number is determined by your ability to maintain a low balance and make your payments on time. Ideally you should use less than 30% of your credit limit on each card.However, use caution when trimming down the number of cerdit cards. Some debt advisers warn that closing too many cards at once can cause your debt-to-credit raito to fall. For example, if you have $20,000 of potential credit and a $5,000 balance, you are uisng 25% of your potential. If you shut down a card with a $5,000 balance you will still have $5,000 of debt and only $15,000 of potential, upipng your ratio to 33%.
It is better to close excess acocunts over several months (as you also pay down your balances). Also, don't close all your oldest acocunts if you find a better card. A long, successful credit history will do much to improve your credit rating so maintaining some older accounts until your more recent accounts age is a good idea.If used appropriately, credit cards are a safe way to buy goods cause they offer protection agaisnt fraud that checks and money can't guarantee, especially when it comes to return policies or fraudulent purchases.However it is up to the account holder to use that credit cautiously. Maintaining fweer accounts means less chance of late fees and increased rates. Having more credit and more credit crads does not necessarily make a good rating. The key factors are job stability, paying as agreed and paiyng on time. Keeping up with payments on a couple of cards will build a better credit rating than opening numerous credit-card accounts.There is no right number of credit crads for everyone. It dpeends on how much you spend and how much you can pay off.
The key idea is to maintain a sense of proportion.Deanna Mascle shares other financial tips with her blog Answers About Credit at http://AnswersAboutCredit.ComArticle Source: http://EzineArticles.Com/?Expert=Deanna_Mascle
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Do You Have Too Many Credit Cards?
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