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Credit Cards: How Many is enough?

Author: StevenJ.Talrechi
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There is no right or wrong answer to this question. But one thing we will say with certainty about this is that you should have as few as you can get by with. Everyone knows how easy it can be to overspend and get into some serious debt. Common sense tells us not to get in over our heads - but common sense is all too often not behind the decisions people make, especially about credit cards. Americans are used to instant gratification and being encouraged to shop. There's nothing wrong with shopping as such, but credit card debt can quickly get out of hand as many Americans know all too well.

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: 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: Have you ever asked yourself why minimum payments are low? The answer is obvious. By asking consumers to make small minimum payments, they encourage the consumer to carry more debt. The lower the minimum payment, the larger the debt someone will owe. Who wins in the end?

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 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.

Just keep these facts in mind as you read on. Getting back to the question of how many credit cards you need, what is this magic number? As for us, we'd like to outlaw carrying more than two! Of course, this idea would never fly in our country.

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.

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.

Just two more facts for you: U.S. cardholders charge as much as 1.8 trillion dollars every year. 1.8 trillion dollars - just think about that number for a minute. 11% of American cardholders pay interest rates of more than 25%! Both of these figures come to us from the U.S. GAO (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.

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.

About the Author

Steven J. Talrechi has been reporting on credit reporting and credit reporting practices for 12 years. He specializes in assiting others with second chance banking and obtaining a checking account when they have been turned down by banks.