How many credit cards do you need? There is no one correct answer to this question. However, as few as possible is really the best advice - it is easy to go overboard with credit and common sense tells you to keep spending on credit under control. You know as well as I do that common sense isn't always what dictates the decisions people make though. There is a culture of instant gratification in this country - and while there is nothing inherently wrong with spending, there is with letting credit cards spending get out of control.
Credit cards are the one of the primary enablers of compulsive spending. Let's have a look at some of the facts here: Fact # 1: On average, a cardholder will have three bank cards and four gas or store credit cards for a staggering total of seven credit cards! This statistic courtesy of www.cardweb.com. Fact # 2: Three fifths of U.S. households are responsible for nearly 560 billion dollars of credit card debt. This comes to $11,000 per household of credit card debt. This figure is from Motley Fool, citing testimony by Robert Manning before the U.S. Senate Judiciary Committee. Fact # 3: Minimum payments tend to be very low - here's why: when the cardholders make only very small payments, they carry more outstanding debt (and thus more interest payments). As you may recall from high school Latin: Cui Bono? - Who benefits from this? Fact # 4: Here's one from Jim who's the principal blogger for a company called Blueprint for Financial Prosperity: you can actually lower the interest rate on your credit card by simply picking up the phone and asking for it. Jim says, credit card companies are like cell phone and cable companies, they're afraid you'll leave and join with one of their competitors. So, use this fact to your advantage and call your credit card company today if you're paying an arm and a leg on just the interest rate. Fact # 5: Students who are carrying significant credit card debt (over $1,000) are more likely to be medicated for depression than their debt-free peers and also have much higher rates of alcohol and tobacco use. These figures come from studies cited by Franklin Galvin, Secretary of the Commonwealth of Massachusetts. Just some things to think about. Now how many credit cards do you think you need? We'd like to make it illegal to carry more than two cards, but realize we'd be run out of town on a rail were we to do so. Credit card spending is just too ingrained in our society. Of course, no one can tell you how many credit cards you can or should have. Your financial planner or banker may scowl, but they can't make you give them up. So let's compromise. If you have more than two to, say, five - why not leave three in a locked drawer and use only two if you really need to. Let's compromise further: when you receive your statements, how about making more than the minimum payment? Your aim should be to drastically reduce your debt. Christmas is almost here. You're at liberty to use your credit cards in any matter you want. This is the time of the year where everyone uses credit cards without holding back or thinking twice since the holidays always put us in a cash crunch. But do yourself a little favor. For your New Year's resolution, how about making a promise not to use your credit card more than once a month? This is like imposing some kind of military-like discipline, but then again, everyone agrees that uncontrollable credit can be compared to a cobra with a poisonous venom. Did you know, for example, that US consumers charge $1.8 trillion to their cards each year? Did you also know that 11% of cardholders pay interest rates of over 25% a year? That was what the Consumers Union of San Francisco learned from the US General Accounting Office. It's time for all of us to take a hard look at the way we use credit cards. Perhaps this can lead to some changes in the way we spend. One of the greatest things you could have is freedom from debt. Just think about the figures we've given you in this article and we think you'll agree with us. Make getting out of debt your top priority for 2008. So yes, it's okay to have more than two credit cards. Personally, we'd recommend only two, but that's not always a realistic recommendation. As long as you're coping well with payments and you can engage in disciplined spending, then by all means, you decide how many credit cards you want to keep. But keep them somewhere where you can't reach out for them when you're out shopping. Without the cards, salivate over a merchandise as long as it takes, then walk away, especially if you don't need it that badly. Patience is a virtue - wait to make those non-essential purchases until you can make them with cash. Don't be too surprised if you don't even want them anymore by the time you can pay cash. Best of all, you'll be helping to keep yourself out of debt. |
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