Credit card debt is still one of the top three reasons why Americans are in so much debt right now. The recent news reports identify this debt as the third highest credit that saddles the average consumer in the country. While the figures are going down, it is still a whopping $847B. It will definitely take ages for us to completely remove this debt from our list.
Despite the high amount, people are still found to be owning multiple credit cards. The average credit card debt is not deterring them from possessing more than one card in their wallets. But before you judge these people, maybe you should consider a couple of things first.
If you try to be objective about it, you will realize that the problem is not in the purchasing tool, but if our own abuse of its use. There are people who never had problems with credit card debt even in the midst of the financial crisis because they knew how to use it properly. If you only learn the right techniques, you will not have to give up the use of credit cards entirely.
Acceptable reasons to have more than one credit card
While we may understand the repercussions of owning multiple credit cards, there are situations wherein it is alright to have them. If you can relate to any of these, then you have a valid reason for having more than one credit card.
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You want to keep your spending categorized. Some people are obsessive about categorizing their spending and credit cards can really help you out during these cases. The detailed list of what you bought will be reflected in your monthly billing statement and some people do not want the hassle of having to sift through them. This is when having a specific credit card will be a great option to separate your expenses.
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You need a high credit score in the near future. Cancelling credit cards can affect your credit score in a negative way. If you have plans to buy a home, you want your loan to be given with a very low interest rate. That means you need to have the best credit standing during the application process.
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You have the type of lifestyle that can maximize the reward points in your cards. If you love to travel or you like making purchases in one store, getting a credit card that specifically provide rewards points for multiple spending can be beneficial. The same is true if your business requires you to be driving all the time, a gas credit card can give you a lot of perks.
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You never had any spending problems. If you know that you can control your spending and you never encountered any difficulty with your credit card balance, then you can possibly can keep the multiple credit cards that you have accumulated.
5 habits that will keep you from debt despite your various plastic cards
In the last part of the list above, we’ve mentioned how some people do not have problems with credit card debt. If you want to keep all your cards and still stay debt free, here are 5 habits that you need to have.
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Be organized. Make sure each card is assigned to a specific purchase category and stick to that. If you are keeping your multiple credit cards to take advantage of the reward points, you have to ensure that you know how to maximize them. Categorize your spending and stick to that plan.
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Use a budget plan. One way to control your credit card spending is to plan them in your budget. That way, you are assured that you can afford whatever expenses you will spend on. A budget plan is a great way to determine how much you can afford for every purchase category. For instance, if you have a specific credit card for groceries or gas, put that in your budget plan. And be conscious every time you use the card to make sure you will not overspend.
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Practice proper payment behavior. This means paying your full balance within the grace period and never being late on your payments. This can be helped by you budget plan. Paying within the grace period will keep your debt from accruing interest and finance charges. Also, late penalty fees can automatically be imposed on your balance so be cautious of your due dates.
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Do not get cards with too much fees. There are cards that has annual fees and if you have multiple credit cards, you will be paying a significant amount every year for all of them. Make sure that you read the fine prints of your credit card agreement to determine the fees that you will have to face. Compare different credit cards through sites like CreditCards.com or Credit.com to find the best card for your spending lifestyle.
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Track your credit card spending. It may be tedious but if you choose to keep multiple credit cards, you have to make sure that you are responsible enough to track where you use it. While everything will be written in your billing statement, you may want to keep a separate record of your spending so you will know if you should stop using it or not. It can also serve as a great reference to check if everything listed in your statement is correct.
In the end, your multiple credit cards can stay if you only learn how to use them properly. Do not think that you have to give it up completely. If anything, learning the right habits is more preferable than simply eliminating the cards from you life entirely.