Making Multiple Lines of Credit Work for You, Not Against You

Credit cards are a way of life. Emergencies, children’s needs, car repairs all seem to pop up whenever you are short of cash. Credit cards are also the fastest way to establish a good credit history and are often required when making travel or other arrangements. However, many people are leery about getting too many credit cards, and with good reason. They fear that having too many cards will damage their credit score, or that the availability of credit will cause them to overspend. The media also plays in to this fear with stories of outrages charges, delinquencies, bankruptcies, and we all know people who have run into trouble by maxing out credit cards, or using one card to pay off another.

Credit card horror stories aside, the fact is U.S. consumers have racked up over $886 billion dollars in credit card debt, and that figure is expected to rise to over $1 trillion dollars in the coming year. Over 2/3 of U.S. households have at least one credit card. The good news is, that as consumers become more financially savvy, credit card delinquencies have actually dropped by 17%. It is the word ‘debt’ that makes many people uncomfortable, but debt doesn’t have to be a bad thing, as long as you manage it intelligently. In fact, you can actually make your credit cards work for you by simply changing the way you use them.

Managing Multiple Credit Cards
Though the U.S. Census Bureau is projecting a decrease in the number of credit cards, the average consumer has at least 4 of them. So, how do you juggle multiple credit cards without getting yourself into trouble? It is simply a matter of maintaining the right debt to credit ratio and matching the right card to the intended purpose.

A good debt to credit ratio for credit card balances is to use about 1/3 of your available credit. It is a mistake to think that if you max out your cards and then pay them in full, you are building good credit. Banks look at how you manage your debt on a monthly basis.

Here are some tips to get the maximum benefit out of your credit cards without maxing them out.

– Don’t apply for every credit card offer you receive, be selective in the cards you choose, and in how you use them.
– Assign each of your credit cards for a specific use, and use that card only for that purpose. If you have a card that offers cash back, use it to make smaller purchases such as groceries and gas, and pay it in full every month. Cards that offer travel rewards and miles are the best to use for travel.
– If you must you store credit cards, limit them to one or two stores that have a specific use, such as shopping for school clothes or home repair and improvements.
– Use one card just for online purchases. This will not only keep you from overspending online, it will help minimize the damage in the event of identity theft.
– Keep one card for emergencies only, and keep it in a place where it is not easily accessible, like a safety deposit box.

Finally, keeping track of multiple credit card payments needn’t be difficult; set up automatic payments with your bank to make sure that all of your cards are paid on time each month.