We have all succumbed to the lure of owning a credit card or two. The importance of having good credit is everywhere in today’s media. Certain credit cards still today can make us feel richer just by owning one.
While it is an excellent idea to establish good credit early on in life, as well as a necessary evil, it is equally important to know when too much is enough.
The Cons of Keeping Credit Cards Active
If, like most of us, you have a wallet full of credit cards it might be a good idea to take a long hard look to see what you use and what you do not use. Having a credit card just because you received 10 percent off your purchase originally may not be a good idea if you never used it again after that.
Having too many credit cards open will show up on your credit report and may put a black mark on that credit that you worked so hard to obtain. The rule of thumb is that if you have not used that credit card in six months, then you do not need it and should close it. That one card may be the one that shows you under the category of too much revolving credit open.
Another con of keeping credit cards active is that the more you carry, the more you may use, and the greater chance there is of not being able to pay up. Having too many credit cards with small balances on each one makes keeping and sticking to a budget very difficult. The mindset becomes one of “Well, I only put a few dollars on this one and that one.” By the time you are done nickel and diming yourself, you will have forgotten just how much you really have on those cards until the bills comes – and then you are unpleasantly surprised.
Some cards may also have a fee involved that you are not even aware of until you see a bill for $50.00 arrive in the mail for automatic renewal.
The Pros of Keeping Credit Cards Active
One of the biggest pros of keeping credit cards active is that this shows that you are capable of keeping multiple lines of credit alive and open and maintaining them successfully.
Once a creditor sees that you have multiple lines of revolving credit and are responsible in paying them off on a monthly basis, then you are more apt to gain even more credit and higher lines of credit at that. This comes in handy if an emergency arises and you need to have instant credit approval.
Having multiple lines of credit open also shows up well on your credit report. As long as there are no late fees or missed payments on all those cards, then you are in a good place as far as your credit rating.
The best thing to do when keeping credit cards, however, is to be reasonable. If you can successfully maintain one or two major credit cards and one or two department store credit cards, then it is in your best interest to do so rather than having too many credit cards open all at once.