How Many Credit Cards

How Many Credit Cards

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How Many Credit Cards is too many credit cards?

How many credit cards do you have? Are you the type of person who is good in controlling him or herself when it comes to spending with credit cards, or do you fill out every credit card application at every retailer for the sake of getting the gift that comes with it?

There is such a thing as having too many credit cards. Everyone should ask themselves how many credit cards they really need. In reality, you really need one or two credit cards; perhaps one Visa card and one MasterCard or American Express card. Most retailers, online shops, and other merchants accept Visa and MasterCard, so if you have one of each card you’re pretty well covered everywhere you go to buy things.

How many credit cards you need? We suggest no more than two. Here are some disadvantages of having too many credit cards:

  • The likelihood of losing a card can increase by having too many credit cards.
  • If you are not good with controlling your spending, you can easily max out on your credit cards.
  • Maxing out on credit cards is not healthy for your credit rating as your credit score will start to drop.
  • When time comes to apply for a loan, having too many credit cards can raise a red flag for the person or institution who is considering lending you money.
  • Having too many credit cards can create challenges in managing them and paying their balances on time each month, which in turn will negatively affect your credit rating.
  • Every time you apply for a credit card your credit report will take a hit; meaning, the credit card company has to check your credit report to make sure everything is good before they accept your credit card application. That hit to your credit report can affect your rating.

how many credit cards

 

Some people in their efforts of trying to help you out will consider how many credit cards you need based on whether you are newly starting to establish credit or not. That’s fine, but we still think having just two credit cards is enough to help with establishing credit history. Down the road you may, if your income can support it and your track record of paying back loans on time, consider getting a third credit card.

how many credit cards

 

In the context of building and strengthening your credit report and history with the credit bureaus, here is a ‘link‘ to Industry Canada talking about improving your credit score.

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Pay Down Your Debts

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Pay Down Your Debts

The New Year has started and what better way than to set practical and achievable goals to pay down your debts for this year. Many people build up a lot of debt throughout the year, and to top it all up, by the end of the year during the last month of it, more debt is accumulated due to holiday spending.

It is very important pay down your debts as the more personal debt you accumulate it will put a great amount of stress on your credit score. Your credit score will start to come down through time if you don’t pay down your debts on a regular basis, making timely monthly payments each month without being late. Pay down your debts

It can be a daunting task, especially if your debts are high, but there is light at the end of the tunnel. The first step is to make a personal commitment to yourself that no matter what, you will stick with your plans to pay down your debts.

Next, seek professional help and do lots of research about what resources are available for the consumer on this subject matter. One place that you can start with is the Financial Consumer Agency of Canada.  This Government agency has lots of helpful and useful information and tools about personal finances.

Sit down and evaluate all your debts. Break them down one by one so that you know exactly how much money you owe, and to whom or what financial institutions you have to pay them back to. If you’re running tight with money and don’t have too much to spare, at the least try to set a monthly budget aside to pay down your debts  with the minimal payments that each creditor allows you to make. Ideally you would want to pay back the entire debt; however, sometimes this is not possible to do at the start.

Some consumers might also own their home and have some amount of equity built up on it. Another option for your plans to pay down your debts could be to refinance your home, or use an existing Home Equity Line of Credit HELOC to pay back your high interest loans and then on a monthly basis pay down your HELOC or refinanced mortgage.  Most personal loans have a lot higher interest rate than the average residential mortgage interest rate. Using the equity built up of your home in the form of a HELOC or a new mortgage can save you  from high interest payments.

You can also Contact Us if you have any questions or need assistance with paying down your debts. We will do our best to help or at least to point you to the right direction.

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Debt Consolidation

Debt Consolidation

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Debt Consolidation

The holiday season is over and now is the time to start thinking about all that spending you made during the last month or two. Well, if you own real estate, then there is a better option of doing a debt consolidation. debt consolidation

Many people will be stacking up high interest rate credit cards or using their personal line of credit’s to pay off their high interest rate credit cards, but even the unsecured personal line of credits that the banks offer have high interest rates.

If you own your own home and have been paying down the mortgage there is a good chance that you have built up value or equity in your property.

Equity is the amount of money worth on your home, when you take the appraised market value and subtract it from your current outstanding mortgage balance. Financial institutions in Canada, such as chartered banks and trust companies offer secured lines of credit or otherwise known as Home Equity Line of Credit HELOC up to 80 percent of the appraised value. In the financial services industry it is called Loan to Value LTV.

With today’s current Canadian prime lending rate of 3% HELOC’s are rated at Prime plus a percentage point. On average the Home Equity Line of Credit interest rates as of the date of this blog post are Prime + .50%. Is not this interest rate better than the 18 and above percent that you would pay with your credit cards?

A Mortgage Brokerage company such as Trusterra Mortgage would be in the best position to offer you professional and unbiased advise in the context of real estate and mortgages on how to manage your holiday debts and to help you start saving money and interest.

What are you waiting for? Contact us and let us help you to consolidate your accumulated debt and save on high interest rates.

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Secured Credit Card

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Why a Secured Credit Card

Living in Canada means that you now have to start building your credit score and credit strength. In some cases a secured credit card can help you do this. What does this mean? When ever you go to purchase something that requires you to get a loan, such as a car, or house, the lending institution that is considering your loan application will check to see how strong of a credit score you have. There are two credit reporting agencies in Canada; Equifax and Transunion.

For people who have just arrived to Canada, or for students who have finished college or university and are getting out into the working field, they will need to get their first credit card or line of credit. This is important in two ways. The first is that they will now have a source of credit to purchase what they like, and second, as soon as they start buying items and putting charging it to their credit card, those transactions will be reported to Transunion and Equifax. These credit agencies use specially designed algorithmic formulas to determine your credit score and credit strength (worthiness).

The lending agencies such as chartered banks count on these credit scores to make their final decision as to whether approve your loan or not due to how reliable you are with paying back your debts. The higher your credit score, the better it is.

A secondary service that we have at Trusterra Mortgage is to help individuals to build or rebuild their credits by providing them with a secured credit card.

Before we go further in this post and explain to you about what a secured credit card is, we should point out that there are individuals who have been living in Canada for many years and did in fact have credit cards, but for some reason or another, they ran into financial difficulties and throughout time were not able to pay back their loans, or paid them back very late. Because of these discrepancies their credit scores have been reduced greatly and now the major credit card company’s / banks will not approve them for any credit cards until they can show to the bank again that they have a strong an clean track record of being able to pay back their loans on time.

Now, back to what a secured credit card is. Basically it means that you will have to provide a security deposit to the credit card issuer in order for them to approved you on that security deposits amount to be your credit or spending limit. Therefore, if you provide $500.00 as a security deposit onto the credit card, then your credit limit on the card will be $500.00. You can spend up to this amount but you can never go beyond it. Also, if for some unfortunate reason you can not pay back what is outstanding on the card, the credit card issuer already has your security deposit and they have nothing to lose.

The main purpose of getting a secured credit card is so that you can start building credit activity to your name. As you use the credit card in your day to day purchase transactions, your credit score can start to move up and eventually you will be able to go to a major bank and apply for a unsecured credit card. After which point, you can cancel your secured credit card, get your security deposit back and be on your marry way.

Generally speaking, pretty well everyone who applies for a secured credit card get’s approved.

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