Credit Cards: How Many is enough? | Credit

By 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 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: 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: 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.

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.

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 is high time that Americans examined the way that they use credit cards and decided to be honest with themselves.

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?

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 writing about credit and credit 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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