How Many Credit Cards Should You Have?
Most people these days have at least one credit card if not more. Credit cards can be useful for all sorts of reasons. They are good for shopping online, purchases are insured so if they never arrive you can make a claim through the credit card issuer, some offer cashback or other benefits, they are a good way of borrowing money and they can be great to rely on in an emergency. Some people have more than one because they have used all the credit available on one and get another or because they use different cards for different things.
Credit cards can be very convenient and a good way to pay for things as well as to get really easy credit. Once you have the card you do not have to keep applying for a loan as it is there for you to use whenever you want it. It means that when you do not have enough spare cash or you want to keep some cash in your account, you can just use the credit card instead.
However, the convenience of the credit card can be part of the risk of having one. The fact that it is so easy to spend money means that you can end up spending more than you can afford to pay back. The more cards that you have, the more likely this is to happen and you could end up with a lot of debt. Credit cards do not ask for regular repayments, they just ask for a minimum monthly payment which could only cover the interest rate charges. This means that you will not be forced to pay back any of the money that is owed. Then next month they will do the same thing so you pay them the charges and nothing else. If you add up how much you are paying charges it can be really high and far more than the convenience of using the card is really worth.
The amount of cards that you have is not necessarily an issue here, but it really depends what you do with them. If you spend carefully and make sure that you pay off the full balance each month, then it does not really matter, although it may be easier to keep an eye on what you are spending with just one card. If you do have several cards then think about whether you do need them all. You may have low credit limits on them and so need them all so that you can get the amount that you need, you may use them for different purposes. However, you may be able to get everything that you need from just one card and if this is the case it may mean that you will be able to get rid of some and just have the one. If you have extra cards, it means that you will have access to more money and it could mean that you will be tempted to get in debt.
The safest thing to do with all credit cards is to set up a direct debit to pay off the full balance each month. This means that you will never have to pay any interest charges to the card issuer. It can be a very good way of managing your money if you put on purchases on the card through the month and do not have to pay for them until the end. You will effectively get interest free credit on those items for that time and you can be earning interest on the money that you would otherwise have spent on them. There is a risk with doing this though as if you have a month when you cannot pay off the balance for some reason, you will then have an unpaid debt which will be charged interest. However, this is less risky than other sorts of debt as there is no collateral so you cannot lose your home or car if you do not make the repayments.
So really you need to think yourself about how many credit cards you should have and in fact whether you should have one at all. You will know whether you think that you can trust yourself to use it wisely and make sure that you will always have enough money to pay it off. It may be best to not have one so that you are not tempted to get into debt. However, you could find that it is a really convenient way to borrow money for free in the short term and also as a backup should you run out of money at all. Just make sure that you do think about it before getting one or more and if you already have one or more consider whether you should keep them or not.