How many credit cards do you have? (s...
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How many credit cards do you have? (s...
| Tue, 07-19-2005 - 10:37am |
How many credit cards do you have? (see article attached)
- 1-3
- 4-6
- 7-10
- 11-15
- 16-20
- 21-30
- 31-40
- 41-50
- over 50
You will be able to change your vote.


HOW MANY CREDIT CARDS IS TOO MANY?
http://moneycentral.msn.com/content/Banking/creditcardsmarts/P123470.asp?GT1=6705
The magic number varies, but the advice for juggling them doesn't. Don't use too much of your available credit, and don't open or close too many at once.
Look through your wallet. How many credit cards do you count?
Have promises of better rates, perks and lower fees caused your wallet to overflow and your mailbox to be stuffed with hundreds of offers each month?
While most Americans carry between five and 10 credit cards, some people carry up to 50 -- which could wreak havoc on your credit score.
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. But there is an upper limit: Credit agencies warn that the more cards you have, the bigger risk you carry for racking up debt and damaging your credit.
Beware of store credit cards
"Some people go hog-wild at Christmas and open lots of store credit cards to get that 10% to 15% off their purchase," says Cate Williams, vice president of financial literacy at Money Management International. "Relatively speaking, that is a good idea if you pay off the balance and close the card right away. If you don't, then you will be costing yourself more money in the long run when your credit score isn't up to par."
Steve Rhode, president of Myvesta, a nonprofit consumer-education organization, agrees, saying that each time you open a store credit card, 20 points are taken off of your credit score because, he says, "Historically, store credit cards are issued to anyone with a pulse. They issue credit cards to people who otherwise can't get credit."
Other credit counselors say that you should open a store credit card if it is a store that you shop frequently. Williams says that many store credit cards provide their customers with coupons, bonus points and information on upcoming sales that can only be obtained if you carry the store's card. However, she highly recommends that you open no more than one favorite-store card.
Some rules of thumb
According to Steve Bucci, Bankrate.com's Debt Adviser columnist and president of Money Management International Financial Education Foundation, the average person carries 11 "credit vehicles." Typically, seven are different types of cards and four are installment loans for cars, furniture, student loans or mortgages. Some credit experts see people with 45 or more credit cards -- and many of them are high-income earners. Some are people who think that the more credit you have, the better, says Bucci.
He says a good rule of thumb is to keep two to six credit cards. "Make sure the credit cards you have are Visa, MasterCard, American Express or Discover, because merchants will take almost any of them," he says.
Try your best to pay them off regularly, or if you can't pay them off, find a credit card that has a low interest rate to use for emergencies when you need new tires or when your water heater breaks, says Williams. "It's also a good idea that your other credit card has reward points or air miles, something that gives you something back. That card doesn't have to have a low interest rate if you pay it off every month."
Keep your debt ratio low
Another 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.
"Keep credit purchases under 50% of the credit limit. (If you have a) $5,000 limit -- and you want to buy a $4,000 furniture set -- split the purchase onto two cards," says Williams. She says that creditors don't like to see a card almost maxed out; they look at you as a risk, someone who is using too much credit and has trouble paying off debt.
There is no one sure-fire way to have perfect credit. In fact, four credit experts were interviewed for this story and they offered contradicting advice. However, they all agreed on two major things:
1. Make your payments on time. One late fee or even two can really bring down your credit score and increase the rates on your other credit cards. You are the only person responsible for payment.
2. Do not run up your credit. Ideally, you should keep your balance low -- less than 30% of your credit limit on each card.
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%.
"It's a tricky business, but creditors don't care, because they know you need credit. If you are a good, money-conscious consumer who pays for everything in cash, basically you are dead to them. So establishing and using credit wisely is so important," says Rhode. "I'm a huge fan of credit cards -- used appropriately, a credit card is a safe way to buy goods -- the money is not taken out of your account before you get to dispute the charge. Other forms of payment have less protection."
Williams agrees.
"Credit cards are great because they offer you so much protection against fraud that checks and cash can't guarantee, especially when it comes to return policies or fraudulent purchases," she says.
Credit card basics
If you have a credit card, you have a credit history. So, the first thing you should do is obtain a copy of your credit report, review it for inaccuracies, correct any problems and then slowly close unused accounts -- trying to close one per month.
Not having a lot of credit cards decreases your worry of late fees. It is easier to remember your payment dates. "Someone with 15 or more cards probably has a difficult time remembering when all of them are due," says Rhode.
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.
Be aware of the terms on your credit card, because those terms dictate your agreement with the creditor. You need to ask about the interest rate and what penalties are attached to the card.
Also, 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," says Joyce Murray of Money Management Internal.
According to Experian, one of the three major credit reporting agencies, there's no right number of credit cards for everyone. It depends on 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.
Ok, I said 7. For those who have posted recently about falling off the wagon, I'm with you.
Bank of America - $5,600 or so at zero interest, and it was my debt consolidation last year. I'm not focused on paying this off right now because I'm saving for a house. Minimum payment is only $10 and at the end of the year I'll need to find another zero interest offer.
Chase - This one is around $1,700, and it represents my fall from the wagon. I'm working on maintaining the balance and keeping it from growing until after I buy a house.
Capital One $300 - This one will be paid off soon, I just use it for small purchases and usually pay them off within a month or two (or three).
MBNA $0 - Or almost $0. I charged airline tickets on it but it should be paid before they even send the statement out.
Gap $0 - I use this sometimes to get a discount, always pay it off right away
Best Buy $0 - I used it to buy a refrigerator at zero interest and paid it off
Mattress Giant $0 - It's funny they have a credit card for a mattress store. How often to people buy mattresses? Anyway, I used this one to buy dd a bed at zero interest and paid it off.
What an interesting article-I didn't even think of my store cards when I answered the poll because I use them so rarely and always pay them off (Kohl's, JCPenney's, Sears and Target). In each case, I started the card when it was 15% off of a major purchase. I do know that Sears closes your account if it's not used for a certain period of time and Best Buy does the same.
Taleyna
I think its interesting that it says every time you open a store card your credit score drops 20 points.
Something i probably would have liked to know a few years ago! If I had all those sets of 20 points BACK, now!
Teresa
http://www.affordingpickles.blogspot.com