Facebook Twitter



Congress did consumers a favor this week by enabling them to do a better job of shopping around for credit cards offering lower interest charges.

The lawmakers did so by passing a bill requiring banks, department stores, and other issuers of credit cards to provide more information to consumers about interest rates and other charges before the cards are issued.Previously, creditors were not required by federal law to disclose this information until after customers received their cards. Only 10 states had laws mandating such information beforehand. The new federal law replaces state regulations.

But consumers can do themselves an even bigger favor than they will get from the new law. How? By performing a little plastic surgery on their own wallets and eliminating their excess credit cards.

A startling fact about credit cards came to light while Congress was debating the new law. It seems that nearly 106 million Americans hold 800 million credit cards. That comes to more than seven cards each.

Of course, not everyone has seven cards. Which means that plenty of people have 10 or 12 cards - and the whopping potential for debt that goes with them. It doesn't take a mathematical genius with an electronic calculator to figure out that this amounts to poor credit planning.

A credit card can be a useful tool for those who pay promptly. Or it can be a trap for those who let themselves be lulled into incurring more and more installment debt.

A good rule of thumb is that mortgage debt should not exceed 30 percent of income, and over-all debt - including car loans and credit card balances - should not exceed 35 percent of income.

In any event, seven credit cards per consumer is easily too many.