If you’re serious about cutting expenses, getting out of debt, saving money, or just trying to make ends meet, your first step is to cut credit card spending. Now don’t get me wrong, credit cards are a good thing if managed properly.
And a well-managed credit card builds a solid credit history and that matters when you’re buying a home or financing a major purchase. By well-managed, I mean reasonable credit card purchases that are paid off at month end, or soon after.
A credit card is also a must to book airline tickets and other services that do not accept anything but credit, or when buying online. This little piece of credit can be a lifesaver when your vehicle breaks down on a trip or you need emergency dental.
But too much of a good thing …is not that good. That is, too many credit cards will end up costing you!
There’s no need to have twenty credit cards. Most retail or gas outlets will accept major credit cards, so you don’t need one for every major store. Or one from every credit card company that sends you a nice invitation to join. So if your wallet is bursting with credit cards (and not money), you need to do some serious credit card cutting.
What Happens With Too Many Credit Cards:
- It’s tempting to charge on more than one card – it reduces the guilt trip while shopping. The blue one is nice for this store; the black one for the next stop.
- If you have several card balances on the go, at month end those individual amounts don’t look so bad. Just avoid taking a total.
- Some credit card companies charge an annual fee, but you don’t have to total these up either – they look just fine as is.
- Monthly interest charges don’t look too bad either, in small doses.
- Don’t like all that bill mail? No problem, just sign up for paperless ebilling (totals are so small; hard to read)
- When you have ten cards on the go at month end, just pick one to pay or draw straws. And the winner this month is….
- At some point, this house of cards, will come crashing down!
Sarcasm aside, I’m sure you get my drift and you can properly tell those come from experience. So if you’re serious about cutting debt – start cutting, but do it wisely.
Review each credit card statement. You should see the interest rate somewhere – consider keeping only those with the lowest. And give some consideration as to the popularity of the card(s) you keep. They should be well-recognized credit cards.
While deciding which to keep, you might even want to consider some included benefits such as Air Miles or points cards, if you can and do use these. And you should know what the annual fee covers or whether it’s reasonable.
Some credit cards have built-in features such as sickness or job loss benefits, where payments are made for you, should such an event occur. It’s unfortunate, but these types of benefits are often unclaimed by those who really need them, just because the credit card holder didn’t know they were included.
It’s a good idea for each adult to have their own credit card (to build a credit history) and a second card kept strictly for online purchasing – one that has a very low spending limit. Should your online credit card number be hijacked, they couldn’t get too far with their shopping if you have set a low limit.
As for the credit cards you decide to keep, it’s a good idea to consider lowering them to reduce the debt potential. So cut away! It will feel like a refreshing breeze and a new start.
Now start paying off those old balances. Unfortunately they didn’t disintegrate with the card cutting. But with no way to increase that debt, you’ll have them paid off in no time and you’re on your way to achieving your financial goal and being in control, not being enslaved by that bit of plastic.