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| Credit Cards |
Just about everyone has at least one
credit card in his or her wallet. In fact a recent study found that Americans each held an average of between 7 and 11 credit cards. Most of them are probably at or close to their credit limits. Many of these cards are sent to people without them even asking for them. Those with good credit and a home mortgage will get bombarded with offers for these types of cards on a daily basis. Most offer good initial interest rates making them look very tempting.
Having too many credit cards can, however, add to a lower credit score. Your credit score is based on a number of factors. One factor that contributes to your credit score is the ratio of available credit to used credit on your various cards. The best thing to do is to reduce the number of cards that you have and pay off any that have high interest rates. Often there are introductory interest special offers that provide for low APR for the first six months or year of having the card. These can be good as long as you pay attention to when you receive them. Once the introductory time limit is reached you may be hit with even more charges based on your balance.
You can use credit cards to your advantage. First, keep only a few of these cards. Don't simply cancel your card because this can also have a negative impact on your credit. Instead, pay down your cards and then just keep them without using them. This will effectively keep your account open without accumulating any additional charges or interest. When paying off your credit cards always pay more than the minimum payment. Paying only the minimum payment often does nothing to reduce the debt because you will still have ongoing finance charges on the unpaid balance.
On the credit cards that you do keep and use try to pay down the credit used to keep it below 80% of your available credit. This will help with your credit score. If you have a lot of cards come up with a plan for paying them off. Stop buying things on credit until you are certain of your spending abilities. A budget will help you stay on track and will keep your spending in check. Develop a plan for paying off your debt. Choose the cards with the highest interest rates and focus on paying them off first.
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