Whether you're in the city or at the farm, they always find you. The enticing credit card offers promising low rates and instant cash. With springtime approaching and expenses at the farm growing, who couldn't use a little more cash flow?
The first consumer credit card hit the market in the 1950s, and American society was forever changed. Since then, many farmers and ranchers have gone from having little or no unsecured credit to carrying several credit cards with the power to charge thousands of dollars. And while it’s become easier for us in the agriculture business to apply for and receive multiple cards, it doesn’t always mean we should.
Mark Foster, Director of Education for Credit Counseling of Arkansas said, “The most important thing is to read and understand all the terms of the credit card – know what interest rate will be charged, what fees you could be assessed, and what your due date is.”
Foster also said to keep these issues in mind when taking on multiple credit cards:
Other factors involved. Having more than one credit card doesn’t always mean you will have an excellent credit rating. Factors such as paying on time are more important to your score than overall available credit. In fact, taking on too much available credit in a short period of time can damage your score. Furthermore, it is always good to have a mix of revolving credit (e.g. credit card) and installment credit (e.g. mortgage).
Don’t be late. One late credit card payment can decrease your credit score by nearly 100 points, and can cause interest rates on one or more of your credit cards to increase.
More than the minimum. Ideally, you want to pay balances in full each month, but it doesn’t always happen. If you can’t pay your full balance, do your best to make more than the minimum payment. It is also important to never let your balance exceed 30 to 50 percent of your available credit.
Solid history. Maintaining an older, more established account in good standing is always helpful to your credit score. Transferring a balance to a credit card with a more favorable interest rate may help you pay debt down more quickly, but closing out a card you’ve had for years shortens the life of your credit history.
Regular check-up. Pull your credit report on a regular basis to check the accuracy of your credit card activity. Negative information that is correct cannot be removed from your report, but inaccurate information can be disputed.
Consult the professionals. Debt consolidation and credit counseling agencies are not difficult to find, but make sure you do your research before consulting any agency. You want to make sure that the agency is non-profit, has certified credit counselors, and spends enough time with you to do a thorough analysis of your financial situation. While participation in a debt management program usually will show up on your credit card, it will not affect your credit score.
So consider the pros and cons of taking out multiple credit cards, and ask yourself one simple question: “How many credit cards do I need?”
Mary Catherine Harcourt is with Credit Counseling of Arkansas.
