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 are both a blessing and a curse for consumers - here are some important facts:
Fact # 1: Each cardholder owns an average of 7 credit cards: three bank credit cards and four store or gas cards (John Gibbons of ABC News online, citing a statistic from www.cardweb.com).
Fact # 2: Three out of five American households account for approximately $560 billion in outstanding credit card debt. Credit card debt averages over $11,000 per household. (2001 testimony from Robert Manning of the US Senates Judiciary Committee as cited by Selena Marajian, Motley Fool).
Fact # 3: Minimum payments are low - why? When only small payments are made by the cardholder monthly, the consumer carries more debt over to the next month - and this means more income from interest payments for the credit card companies. Ask yourself: who makes out better from low minimum payments?
Fact # 4: Lead blogger Jim at Blueprint For Financial Prosperity gives us this useful fact. Credit card companies, just like the phone company or cable company, want to keep you from going over to their competition. If you contact them about interest payments which you think are too high, they will almost certainly work with you. Call them; you’d be surprised what you can get them to do for you.
Fact # 5: Students who carry a credit card debt of over $1,000.00 tend to drink and smoke more, take medication for depression and have lower grade averages in school. If you think we made this up, it was actually taken from some studies and none other than Secretary of the Commonwealth of Massachusetts, Franklin Galvin, said so.
You’ve got those facts to mull over. Let’s go back to the question of how many credit cards you really need. If we had our way, we’d make it illegal for individuals to carry more than two credit cards. But we’d be banished from this land if we ever campaigned for it.
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.
If we may propose something - If you’ve got more than two cards, why not lock up the excess cards in a secure place to keep temptation at bay? Another idea - When your statement comes each month, make a payment larger than the minimum. After all, the idea is to get out of debt and this will make things happen faster.
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.
Isn’t it about time we looked at our credit card spending more closely and conducted a self-criticism analysis?
The best thing we could have is freedom from debt - and the statistics on debt carried by a lot of U.S. citizens bear this out. Don’t let yourself become trapped by the cycle of credit card spending and debt - make getting out of debt your top priority this year.
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.
Wait until you can pay cash for those things that you want rather than need. Patience, after all, is a virtue.