| One of the most often asked questions about credit | | | | zone. The most conservative lenders balk at a debt |
| cards is 'what's the ideal number of credit cards to | | | | credit ratio above 25-30% of your available credit. |
| have?' The question is asked as if there is a magic | | | | There are other reasons to limit the number of credit |
| number that will tell lenders that you're credit-worthy | | | | cards you carry as well. When you have one credit |
| without hacking away at your credit rating because | | | | card, it's easy to keep track of your spending and your |
| you have too many credit cards. The reality is not that | | | | account due dates. Add a second credit card, and |
| simple. | | | | you're still all right - but what happens when your one |
| The ideal number of credit cards is a very individual | | | | credit card turns into 15 in your wallet? At that point, |
| thing. It depends on a combination of factors, including | | | | you're at serious risk of accidentally missing due dates |
| what type of credit card each one is, your monthly | | | | out of sheer forgetfulness - and that will kick up your |
| income, the amount of credit available to you and your | | | | monthly charges, sometimes on more than just the |
| history of making payments on your credit cards. | | | | affected card. |
| According to the NS&I Quarterly Savings report issued | | | | So what is the ideal number of credit cards? Here are |
| in June, the credit card UK market is doing booming | | | | some rules of thumb to help you decide if you have |
| business, with 4.1 credit cards for every adult in the UK. | | | | too few, too many or just enough: |
| So is 4.1 the magic number? | | | | 1. Your monthly credit card payments should be no |
| In most cases, say financial experts, the right number | | | | more than 25% of your monthly income. |
| of credit cards is between 2 and 6. Of those, you | | | | 2. If you've forgotten to make a credit card payment |
| should have at least one major credit card - | | | | because you just MADE a payment - but it was to |
| Mastercard, Visa or American Express - as those are | | | | another company - you probably have too many |
| accepted nearly everywhere you go and are the | | | | cards. |
| most genuinely helpful in the case of an emergency. | | | | 3. If you can only make the minimum payments - and |
| Other credit cards you may carry include a store | | | | sometimes not even that - then you should consider |
| credit card - which generally charge interest at | | | | consolidating some of your debts onto one credit card. |
| whopping rates close to 30% - and a gasoline card. | | | | UK companies offer many balance transfer cards that |
| More important than how many cards you're carrying, | | | | can help you consolidate your debts. |
| though, is how much you owe on them. | | | | 4. If you're not sure which cards are at or close to |
| One of the things that factors into your credit score is | | | | their limits, you probably have too many. |
| your debt/credit ratio. The credit bureaus compare | | | | 5. If your total debt is less than half of your total |
| how much credit you have available to you in relation | | | | available credit, you're probably in pretty good shape. |
| to how much you're currently using. If you have one | | | | There are some really good comparison sites where |
| credit card with a credit limit of £1000 and you're | | | | you'll find all the best deals on offer for any credit card |
| carrying a balance of £500, then you're using | | | | UK companies offer. If you're looking for another credit |
| 50% of your available credit. Is that good? That | | | | card, your first credit card, or a balance transfer credit |
| depends on the source of your information. Some | | | | card to reduce the number of cards that you carry |
| lenders would consider 50% credit usage to be | | | | make sure you thoroughly research the options first of |
| unacceptably high. For others, it's right in their target | | | | all. |