Credit Cards – Can You Have Too Many?

My 22 year-old son, gets at least 10 credit card offers every week. He already carries 4 cards and a gas card. It would be possible for him to get way over his head in debt. Thank goodness he is a cautious person and knows the value of credit and that a good credit rating can make or break your financial future. 

The more credit cards you have that carry a high balance, the worse your chances are that you will be able to get a lower interest loan when you are ready to buy a home, car, or start a business. You may not be able to get a loan at all, as lenders look will at your outstanding debt and many may feel that you are carrying enough debt. 

The fewer credit cards you have, the more likely you are to gain the lenders confidence. The fewer credit cards you hold, the less your interest rates are likely to be. If you feel you do not have enough credit on your cards, ask the credit card company to increase the limit on your existing cards, instead of having multiple cards. 

The more cards you carry, the more likely the chance of falling into a pit of debt, you may have a difficult time getting out of. During the holidays, especially at Christmas, many people open new credit card accounts because the companies are offering special, seasonal rates. This is okay if you are able to pay these cards off in a short time, and then cancel them before the interest rate goes up. 

Every time a credit card account is opened you will lose 20 points on your credit score. The average person carries between 7 and 12 outstanding accounts, others carry as many as 50. It is not a good idea to carry more than six cards at one time. Just try to make sure you are getting a lower interest rate on your credit cards and you may want to look into a card that will give you rewards when it is used. You should also keep credit card balances at less than 50 percent of the total credit limit. Creditors do not like to see full limit accounts, they feel you are a poor risk. 

As a rule, you should always keep your payments on time and up-to-date, not have too much credit out at one time, not have your credit cards maxed out, and not apply for more credit than you need. This will assure that your credit rating will be in the pink and you are able to obtain that home or new car you have your eye on.