Consolidating credit cards

Credit cards can form crazy situations. Should you have a dozen different credit cards with small amount of debt on each or should you consolidate them all into only having a few credit cards?

Well firstly I want to point out that this article is not amount using a debt consolidation service - that is never a good idea, you will end up paying off your debts for ever. It is more about how to juggle several credit cards and how many to have.

Anyway as a rule having fewer credit cards is a better idea. You may have the same amount of debt by consolidating; however you will have a higher limit. Therefore you could sink further into debt.

Look at it from a banks perspective if you are looking to borrow money or take out a mortgage. With a $10,000 limit and 3 cards you would have a $30,000 limit. But if you consolidated your max debt on your credit cards would only be $10,000.

Of course this is no replacement for having a good credit rating and never missing a payment. If you don't, you should be able to get a good mortgage no matter how many credit cards you have.

Consolidating your credit cards also gives you more options when it comes to the credit card companies too though. If you have to leave some of your credit card companies and have debt, you should be able to get them fighting over you and making better offers.

So although of course it goes from situation to situation, the general rule is that fewer credit cards are better when it comes to borrowing more money or getting a mortgage. Also even if you're not looking into these it is worth considering.

Chris Worfolk

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