The guest "shopper" said that when a store offers, say, 15% off your purchase for opening a credit card, you should TAKE IT so you can get the great deal!
I nearly fell out of my chair at this TERRIBLE advice!!! Why? First of all, the more credit cards you have, the more you set yourself up for identity theft. Second, the average consumer spends more if they have more credit available to them, which wouldn't be such a bad thing if it weren't for the fact that the average consumer doesn't always have good self-discipline when it comes to spending habits. Third, it's difficult to keep track of your spending when it's spread over many different accounts.
But the biggest reason -- this Today show guest apparently does NOT understand credit. Here is how a credit score is determined:
- 35% -- Your payment history: Do you pay your bills on time?
- 30% -- Total amount owed as a percent of limit: You want to stay as far away from your credit limit as possible. Keep your balance low and request credit limit increases.
- 15% -- Credit history: How long have you had your oldest account? (Hint: always keep your oldest credit account open, even if you don't use it)
- 10% -- Application history: Every time you apply for a new credit card (or any other type of credit, for that matter), this part of your score hurts.
- 10% -- Credit Mix: Do you spread your credit over different types of accounts (i.e. Credit cards, mortgage, line of credit, car loan).
Moral of the story: If you can't live without it, you're probably okay having one or two credit cards for your favorite stores, but don't let the appeal of a sale on your purchase tempt you into applying for a credit card. Your credit and social security number MUST be protected, so be careful handing it out loosely.
