December 30,2008
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December 30,
2008
Dormant Credit Card Concerns, Pt.2 –
– Choose the max credit you may need, then stop.We talked about risk on the last page and the trick here is to realize that all these factors inter-play with each other: Risk; Functionality; and Future Planning. Next, we'll look at the functionality facet.
Functionality: We just mentioned that having a large number of open credit card accounts is harder to administrate and how the universal default could come crashing down for missing a single payment on any one of them But more practically, however, not all of the credit cards will be effected and you have more choices concerning switching to other accounts and not using the ‘defaulted' ones any longer. Another danger is having lending limits lowered. With many credit cards to choose from, this doesn't become an extreme hardship because of all the other cards. Having only one card can, however, cause a big problem.
The best mix here, is to possess enough cards to diversify the single-card risk and yet, provide sufficient credit limits between all the cards to cover the emergency needs that could arise while hoping to never actually need it. It's very foolish to yield to temptation with all this available credit, however. One of the largest lenders in the world called me on the phone and offered me $100,000 in cash, interest-free for seven months. There was a $75 transfer fee, but that's peanuts when considering the amount. DON'T do it. Never borrow beyond your means. Nobody should ever need 32 open credit card accounts. Generally, five should be the max.
Likely, the last category (Future Planning) should be the most important. With the economy projected to be going into the worst shape in 70 years (as some project, the future climate of the credit card industry is almost certainly to change drastically. Credit card availability will probably be the biggest crunch.