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How many Credit Cards is too Many Credit Cards?

Aug 17, 2007
Sometimes it seems you can't open the postbox without having a slew of credit card offers and applications slide out into your hand. You are already pre-approved. Our credit card is just waiting for you! All you have to do is call to activate your new credit card.

If you've recently applied for a new credit card, have just finished school, have signed up at a bridal registry or just tied the knot, you've probably got even more credit card offers than usual - life-change events are triggers to credit card companies to flood your post box with offers for low-interest credit cards, credit cards with no interest intro rates, a pretty pink card for shopping and credit cards that give you cash back when you shop.

It's a dizzying array, and it's difficult to say no when the credit card companies want to give you access to all that money. So you sign up for a pretty blue card because you like it, and a Gold card because it has some status to it, and a store credit card because you got a 10% discount on that scarf and before you know it, you've got a whole wallet full of credit cards. How many credit cards is too many?

Here's some information on how creditors look at your credit score, and how the number of credit cards that you have can affect your credit rating. It may make you think twice when you go to apply for a credit card.

Available credit is the total of all the credit that you have available to you. The Available credit rule is that your available credit should be no more than 50% of your annual income. If you make 28,000 per year and you have a Visa card with a 5,000 limit and a MasterCard with a 1,400 limit, a gasoline credit card with a 500 limit and a Virgin Shopaholic card with a 1,500 limit, you're in pretty good shape.

Total debt is the amount that you owe if you add up all your credit cards, auto loans, personal loans, school loans and mortgages. Not including your mortgage, your total debt should be less than one half of your annual income.

The Debt/Income Ratio measures how much of your monthly income you need to meet your monthly budget. If your mortgage or rent plus the minimum payments on your credit cards is more than 38% of your monthly income, another credit card is not a good idea.

Why would you want another credit card?
The answer is a simple one - you may want another credit card that offers you something you can't get with any of your other cards. Lenders do look at credit card diversity - the different types of cards that you hold and use. A positive history of holding and using different credit cards for different things is a mark in the plus column.

If you decide that you should have another credit card, apply wisely. Take the time to compare credit cards against each other online. There are some really good comparison sites out there which makes it easy for you to check the details of multiple credit card offers, compare credit cards against each other and find the best credit card for your use.
About the Author
Jon Francis has been involved with finance for many years! With an in-depth knowledge of the credit card UK market help helps others get the best from a credit card.
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