How to Manage Credit Card Risk
- 1). Gather your credit card statements. Make note of your current credit limits and balances.
- 2). Reduce your credit limits to no more than 20 percent of your household income, if applicable. The website Bank Rate says that keeping your overall credit limits to 20 percent of your household income can help you avoid accumulating more debt that you can afford. For example, if you have a gross household income of $60,000, your credit lines from all sources, including credit cards, should not exceed $12,000. Reduce your credit lines by calling your card companies and making the request.
- 3). Pay down your credit card debt until your individual balances are no more than 30 percent of your available credit. Businessweek magazine says you should stay well below your credit limits, with 30 percent representing a conservative approach to managing credit card risk. By keeping your overall credit limits to 20 percent of your gross income and then using only 30 percent of the available credit, you can put yourself in a good position for avoiding excessive debt.
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