Tips to figure out your credit cards

August 2, 2011 2:40:08 PM PDT
As you pull them out of your mailbox, credit-card offers can seem so enticing - 0% percent introductory interest rates, attractive cash-back options, and no annual fees. It may seem like the ideal time to get a new credit card.

But Consumer Reports says be aware that your credit score can take a temporary hit when you apply for new cards.

"You might not want to risk that if you're applying for a mortgage or other significant loan in the near future," says Chris Fichera of Consumer Reports.

But if you already have a lot of cards, don't worry. Contrary to popular belief, having several cards may actually help your credit score if you use them wisely.

"The more credit you have available, the better it is for your credit score," says Fichera. "But you still have to keep your spending well under your card limits and keep making your payments on time."

There's another common misconception: That you should hold on to your oldest credit card no matter what.

"How long you've had credit does count for 15 percent of your credit score. But even after you ditch a card, it can still count toward your score for as long as ten years," says Fichera.

So if your overall credit history is healthy, it may be a good time to get rid of your old cards if you don't like their terms. But do check carefully for any fees, such as balance transfers, and make sure you know what the annual percentage rate will be once the introductory rate expires.

If you do apply for a new card - and it affects your credit score - the damage will only last six months. That is if you maintain healthy spending habits.

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