How Many Credit Cards Do You Need?
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 sustain this spending mode. But let’s look at the facts:
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: 60% of U.S. households account for as much as 560 billion dollars in credit card debt. This breaks down to an average of $11,000 per household. (Testimony by Robert Manning to 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:This fact comes from Jim at Blueprint For Financial Prosperity. Like cable and phone companies, credit card companies want to keep your business and will make concessions in order to retain you as a customer. If your interest payments are too high, call your credit card company - they will very often lower your 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.
No one can make you have only two cards. Your financial planner may scowl and your banker sigh, but they can’t stop you from having as many as you’d like.
We suggest a deal - if you have more than two credit cards, why don’t you take the extra (any more than two) cards and lock them up in a secure location. How about another proposition - Make more than the minimum payment each month. You want to eliminate your debt and this will speed things up.
The holidays will be here before you known it. You will no doubt overspend using your credit cards. At this tie of year, everyone does. How about this though - after the holidays (we realize it may be impossible to keep from overusing credit during this season) you make a New Year’s resolution: promise yourself that you won’t use your credit card more than once per month? This is a bit like going on a strict diet, but you can and must do this if you want to get a handle on credit card debt.
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.
Isn’t it about time we looked at our credit card spending more closely and conducted a self-criticism analysis?
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.
We know that not every person is willing or able to limit themselves to only two credit cards. If you can keep on top of payments and keep your spending under control, then you can have all the cards you like. Another suggestion, if we may - don’t take your cards with you when you go shopping. If you have to pay cash for your purchases, you’d be surprised what you can go without.
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.
Last 5 posts by Steven J. Talrechi
- The Benefits of Having a Credit Card - July 18th, 2008
- Take Full Advantage of Owning a Credit Card - July 15th, 2008
- Credit Cards: How to Capitalize Owning One? - July 14th, 2008
- 5 Tips On Choosing Credit Cards - June 22nd, 2008
- Shopping Around - The Key to Finding the Best Credit Cards - June 8th, 2008
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