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 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: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.
The point is, it's really no one's business how many credit cards you have. It may make your financial planner frown or your banker wince, but no one can tell you to cut up your excess credit cards.
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.
A few more figures for you: Americans charge 1.8 trillion dollars annually (yes, that is trillion with a t). 11% of U.S. cardholders pay interest rates exceeding 25%! These figures come from the U.S. General Accounting Office.
Isn't it about time we looked at our credit card spending more closely and conducted a self-criticism analysis?
Judging from the debt load of many Americans, the best freedom we can have is freedom from debt. Imagine living day-to-day on credit and barely able to make those hefty monthly payments. If you had zero debt, that's certainly something to be proud of! Why not have zero debt as your # 1 priority for 2008?
While we would advise having no more than two credit cards, we know that this is simply not going to happen for many. If you can control your spending and keep a grip on your payments, then you can have as many cards as you would like. However, try not to take your cards shopping with you - if you can't just pull out that card and buy anything anytime, you'll be keeping yourself out of a lot of trouble. You probably don't need it that bad anyway.
Patience is a sublime virtue. Why not wait until you have the cash to pay for it? For all you know, you just might decide that it was merely a whim - certainly something you can get by without!
About the Author:
Steven J. Talrechi has been studying credit reporting and credit reporting practices for over 10 years. He specializes in assiting others with second chance banking and obtaining a checking account when they have been turned down by banks.
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