Thick Wallets: The Average Number of Credit Cards

photo credit: cncpt
photo credit: cncptMost people have so many lines of credit, they can’t name them all from memory. According to MyFico, the average consumer has a whopping 9 credit cards and 4 installment lines (mortgages, car loans, etc).

Most people have so many lines of credit, they can’t name them all from memory. According to MyFico, the average consumer has a whopping 9 credit cards and 4 installment lines (mortgages, car loans, etc).

Some financial advisers talk about credit cards like they’re a bad thing. But, that’s simply not true. Carrying a lot of credit cards gives some substantial benefits to the holder. When you have a large revolving line of credit, your credit score won’t drop so dramatically when you carry a balance. Part of the formula for determining credit scores is comparing the balance to the amount of available credit. Carrying multiple lines of credit can also give you the freedom to choose between offers and take advantage of lower rates.

The biggest problem with keeping so many open lines of credit is that they are difficult to keep track of. Credit card companies offer incentives such as a low starting APR, betting that you’ll forget when the interest rate adjusts upwards. They may also change interest rates and due dates with only a brief notification by mail.

If you keep a lot of credit cards, one of the best financial moves you can take is to track interest rates carefully. Every month, check to see what the APR is on each credit card you carry. Transferring balances to a lower-interest credit card could save you hundreds or even thousands of dollars. (Beware of balance transfer fees, however. Those are another tricky way credit card companies surprise borrowers).

Credit cards can be a tool to help you improve your financial situation. When used recklessly or carelessly, they can easily spin out of control. But, if you’re able to manage your credit cards well, you can use them to get out of debt and avoid paying thousands in excessive interest.