Credit card offers with high limits are one way that banks lure new customers to apply for their brand credit card. Banks encourage high limits on credit cards expecting that most people will reach their credit limit and carry that balance month to month. The problem with this is that you will be charged interest and fees that can add up to a lot of debt.

Credit card applications with immediate approval and high limits should be looked at carefully. High credit limits tempt you to spend more money on items that you don't really need and they influence consumers to spend up to and sometimes over their credit limit in order to keep up with what is the latest and greatest. Choose a credit card with a low limit that will not allow you to give into temptation. A good rule is not to have credit limits that exceed 20% of your gross income.

You may feel that you need several cards, including 1 or 2 in case of emergencies. In all seriousness, most people need 1 credit card for emergencies and no more than 2 credit cards per household. All open lines of credit, including department store and specialty credit cards are considered to be potential debt by lenders. Too much credit can hurt your ability to qualify for loans, mortgages, and car financing. General guidelines are to close off all unused credit accounts and pay off the balances as quickly as possible. Once you do so, call the credit card company to verify that the account has been closed and that you have no outstanding balances or fees. It may take time to accomplish paying off the balances, but keep doing it because it will be worth the piece of mind knowing that you don't have thousands of dollars of debt hanging over your head.

To conclude, choose your credit card carefully, preferably with a low credit limit and low interest rate that you can manage when taking into account your gross income and ability to pay. Don't spend up to your credit limit and don't keep several lines of open credit, pay your balance in full each month, and use your credit card for necessities or items that you can pay for without a credit card.