Take a look into your purse or wallet. How many credit cards do you have? Is the amount of credit you carry just right? Not enough? Too much?
According to a 2010 survey conducted by the Federal Reserve Bank of Boston, the average credit card carrying consumer has 3.5 credit cards. A similar report from FICO shows that the magic number is four. Most credit experts have a different number in mind when offering credit advice.
It’s not a good idea to have more than two credit cards, and those two should not be used to the point where the balances are above half of the credit limit, says Chris Honenberger, president and CEO of Clearpoint Credit Counseling Solutions. Others believe that consumers should be more concerned about how they manage what they have, instead of getting hung up on the number of accounts they are using. Consumers need to be aware of how they manage their debt payments and how often they are relying on credit. Too much use of credit can place someone in a position where they can’t make on-time payments, which can cause some very serious damage to a person’s credit rating. Regardless of how many credit cards you have, most financial experts recommend that you hold your total monthly debt payments to below 20% of your monthly income.
Limiting the use of credit is the most important part of a balanced budget. It more financially sound to spend cash instead of using borrowed money that belongs to the bank. If you feel that your financial diet contains too much plastic, get help before it’s too late. Personalized and confidential consultations are available in person, by phone or online at no cost to you.