The new year is coming! Of course, we all know that. Some of you have reached out to me and asked about credit cards next year, and how many to have. I decided that everyone could benefit from the information as well. When the new year comes, lots of credit cards deals are going to appear as well. You may think that’s a “sign” that you need this card. “This card” ends up being “those cards” and now you have applied, and gotten approved for (hopefully, and most likely if you’re a client of mine) six different cards.
Well, that’s great and all, but now you have to worry about the monthly fees. “Well, Wonetta, it’s only $25 a month.”
Now, you have an extra $150 that must come out of your budget monthly if you decide to use all of those cards. There really isn’t a point to applying for cards that you won’t use, because while,yes, that new credit card on your report increases your credit limit and decreases your credit used, no credit usage on a card is still not that great.
Credit grantors give increases for usage of their card. Credit grantors also close accounts for non-usage. Now you’ve applied, received an inquiry on your credit report, gotten approved, received the card on your credit report, took a small ding to your score for that new card which dropped your average age of credit, and now it’s closed. All of that takes a toll on your credit, multiply that by 3 (let’s say you only use half of the cards) and that makes your credit report look less appealing. We’ll then hope none of them go to collections, or are 30 days late because a late payment can kill your score. Trust me, I learned that the hard way long ago.
I said all of that to say, yes, a new year is coming but please don’t go out applying for tons of shiny new cards just because you can. If you feel you can surely manage the minimum fees (you should be paying more than the minimum payment), then by all means have fun! If you can’t, your time will come, and heed this warning to keep taking great care of your credit and finances, and they will reward you.