The average American holds 5 – 10 credit cards. From traditional lines of credit from the major providers to the plastic that covers gasoline, department stores, and electronics purchases, everyone will need credit at some time. But do you really need 10 credit cards? Experts agree that it’s not the number of cards that you carry – it’s how you use them. Paying them all on time, keeping the balances low and using credit sparingly are the golden rules of credit management. The ideal amount of credit cards is different for everybody. Consider the following variables to decide how many credit cards that you need:
In the Beginning
If you have to build your credit from scratch or are rebuilding your financial situation, one line of credit is enough. Besides credit cards, student loans and auto loans will help you launch a credit history. You will need to prove your financial responsibility by managing this account in a timely manner. After you are established and have determined how much debt you can afford, search for additional credit lines that allow you to build a formidable credit history.
Healthy Utilization
If you feel that credit management is painless and you can easily juggle several cards, focus instead on your rolling balances. You should only be utilizing 25%-50% or less of your total credit limit. With high balances that are closing in on maxed-out status, creditors may look at you as a liability and less likely to pay back their money. So, if you cannot maintain the balance to stay below 50% of your credit line, you may have too many.
Keep it Down
Basically, the fewer lines of credit that you have, the more likely you can keep track of them. Unless you are really organized, it can be hard to track 10 different due dates, balances and minimum payments due. If you are finding it a hassle to keep up, think about paring down. But, don’t close all of your accounts, especially if you have had them for several years. The age of your accounts is a major factor that determines your credit score, so keep those and pay off and close the new accounts.
This was a guest post by GoBankingRates.com, a site that provides daily updates on the latest CD rates, finance information and more.
Tags: Accou, Auto Loans, Credit Cards, Credit History, Credit Loans, Credit Management, Creditors, Department Stores, Due Dates, Financial Responsibility, Financial Situation, Gasoline, Hassle, Maxed Out, Minimum Payments, Number Of Cards, Scratch, Student Loans, Timely Manner, Variables
