How many Credit Cards do I need
Below is a MRR and PLR article in category Finance -> subcategory Credit.
How Many Credit Cards Do I Need?
Using credit cards is a common way for families to make purchases. According to CardWeb.com, the average American family of four carries approximately $8,100 in installment debt, most of it on credit cards. With an 18% interest rate, this can cost nearly $1,500 per year or $125 per month, money that can't be used for other needs or savings.
Assessing Your Credit Card Usage
1. Inventory Your Cards: List all your bank, travel, entertainment, department store, and gas cards. You might be surprised at how many you have.
2. Issuer and Credit Limit: For each card, note the issuing bank and your credit limit.
3. Debt Assessment: List the debt associated with each card. If your total debt exceeds 25% of your credit limit, you might be overusing your cards, and obtaining more isn't the solution.
4. Annual Fees and Interest Rates: Write down the annual fees and interest rates for each card.
5. Cost Calculation: Multiply each card’s debt by its interest rate, then add the annual fees. This total is how much you're spending yearly to maintain these cards.
The Advantages of Credit Cards
Jennifer Tarzian of Young Parents Magazine points out that despite their downsides, credit cards offer several benefits:
- Building Credit History: A solid credit history can aid in getting loans, renting apartments, buying cars, securing jobs, and purchasing homes.
- Emergency Funds: In disasters, like Hurricane Katrina, credit cards can offer essential support for family needs.
- Reduced Cash Handling: Credit cards reduce the need to carry cash, offering protection in case of theft or loss.
- Personal Responsibility and Independence: For young parents or college students, credit cards can provide independence and credibility.
However, typically one national card such as Visa or MasterCard is sufficient for these benefits. Avoid store-specific cards unless necessary, as they can lead to overspending.
Choosing and Managing Your Credit Cards
At Young Parents Magazine, Jennifer Tarzian offers advice on selecting credit cards, reducing debt, preventing identity theft, and more. She cautions young parents about accepting too many card offers, which can lead to excessive debt. Credit issuers often entice consumers beyond their means, leading to high fees and collection calls.
To maintain good financial health, limit yourself to one or two credit cards to control your debt effectively.
You can find the original non-AI version of this article here: How many Credit Cards do I need .
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