Think Before You Apply For A Credit Card

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If you check your mail, one item that most people are sure to see several times per month is an invitation to apply for a credit card.

Credit card offers have inundated us, whether you are a college student or even a senior citizen. It seems that almost every bank and credit card company are in stiff competition to see who can offer credit to the most people as possible. However, before you apply for your next credit card it is important to take several things into consideration.

How Many Credit Cards are Enough?

People love to collect items that are associated with wealth and exclusivity; however one item that you shouldn’t collect is a credit card. Having more than two or three credit cards can exacerbate credit issues usually due to the ease in which a person can borrow beyond their means. For instance, if a person has only two credit cards each with a limit of $3,000 each, the individual will most likely be able to climb out of a credit hole if both credit card limits are maxed out. However, if you have five, six or more credit cards with a total limit in the tens of thousands of dollars, it is no longer easy for a person to climb out of a credit hole; in fact it can usually take 5 to 10 years for a person to pay off their debts in many of these cases. In some cases the only resolution is bankruptcy.

Having Several Credit Cards Can Have a Negative Effect on Your Credit Rating

Some credit experts suggest that having more than three credit cards may be a red flag to many creditors and thus negatively effect your credit rating. Creditors prefer customers with manageable debt, the more credit cards you have, the more debt you can rack up. Even if you don’t use many of your credit cards, there is still a possibility that you can always start maxing out your credit cards and find yourself in debt.

Use Bank Debit Cards Instead of Credit Cards

There are much more advantageous financial tools available besides credit cards that are just as convenient. Debit cards are very similar to credit cards in that they do not require you to carry large amounts of cash around with you at all times, however unlike a credit card, they are tied directly to your bank account which means besides a small yearly or monthly fee, there are no interest payments since you are purchasing items with your own money. Credit cards on the other hand are considered unsecured loans and each purchase you make also requires you to pay interest. This means that a purchase of $20 for a DVD, can end up costing you 50% or even 100% more in the long run after interest charges are added. It is definitely something to think about the next time you would like to purchase an impulse item.

For those bombarded with credit card offers, think before you apply for your next credit card.

Connie Barker is the owner of several financial websites dealing with Bad Credit Loans and Personal Loans.

TransUnion: 3Q credit card delinquency rate rises - Boston Globe

3 Dec 2008 at 1:34am
NEW YORK? The percentage of people who were delinquent on their credit card payments rose in the third quarter from the same time last year, while average debt per borrower jumped 7.7 percent, according to credit reporting agency TransUnion LLC ...

EU businesses say governments should buy commercial paper to ease ... - Newsday

3 Dec 2008 at 10:53am
BRUSSELS, Belgium (AP) _ European Union businesses called on EU governments Wednesday to buy up company debt to ease financing and help prevent bankruptcies as the economy shrinks. BusinessEurope, which represents most EU companies, said commercial ...

US, European interbank lending rates drop again - WTOP Radio

3 Dec 2008 at 6:06am
LONDON (AP) - Interest rates on three-month dollar loans between banks fell for the second day running Wednesday while the equivalent European rates also fell ahead of Thursday's expected rate cuts from the European Central Bank and the Bank of ...

South Dakotans rank low in credit card debt, agency says - Argus Leader

3 Dec 2008 at 11:14am
NEW YORK ? A credit reporting agency says the average credit card debt in South Dakota is third lowest in the nation. Figures from TransUnion LLC show the highest state average card debt was $2,486 in Alaska. Residents of Iowa had the lowest ...

SD Has Third Lowest Credit Card Debt - KSFY.com

3 Dec 2008 at 10:03am
Story Updated: Dec 3, 2008 at 11:10 AM CST A credit reporting agency says the average credit card debt in South Dakota is third lowest in the nation. Figures from TransUnion LLC show the highest state average card debt was $2,486 in Alaska. Residents ...

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January 10 2008 12:15 am | Credit Card

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