Credit cards can be a powerful temptation. We live in a society where instant gratification is publicized as normal, acceptable, expected. You know, the whole “keeping up with the Joneses” bit. We’re constantly faced with all those happy, beautiful people on TV and in print ads who frolic around, laughing, flirting, not a care in the world, as if they have no problems, as if they have every last material thing they could ever want, as if they get no monthly bills…
It’s reminiscent of the old cigarette commercials, isn’t it? They were enticing too, until we all learned about the deadly diseases associated with smoking.
Media images and tag lines can be tantalizing and misleading. At best, they’re fantasies, daydreams of paradise. At worst they’re deceptively alluring and can be dangerous to your financial health and peace of mind.
Let’s think about the most common tag lines for some of the top credit card companies.
- MasterCard: There are some things money can’t buy – for everything else there’s Master Card. Master the possibilities
- Visa: Anywhere, Anytime, Any Way. Visa. How the world pays.
- American Express: Membership has its rewards
- Discover Card: It pays to discover.
- Diners Club International: Do you have the key that opens doors around the world? The Card is Key.
Now consider how many banks there are out there who offer these types of cards…
The fact is, it IS fiscally responsible to have one or two general credit cards, to help establish good credit, in case of an unforeseen emergency, and to pay for things that are almost exclusively paid for by credit cards rather than cash, such as car rentals and airline tickets. And perhaps one credit card for a particular store you shop at routinely for basic items, such as a discounted chain store which carries a variety of general merchandise. But you don’t need any more than that. Period.
Having more than 2 or 3 credit cards can be hazardous to your financial health.
1st, it’s difficult to track all the different due dates and grace periods for each credit card.
2nd, if you carry too many cards, then you’re carrying too much temptation to over-spend.
3rd, the more credit cards you have, even those with zero balances, the more you are considered to be a risk by prospective lenders. Hey just because you’re at a zero balance now, doesn’t mean you always will be. In fact, the nature of credit cards is that if you have an active account, eventually you’ll start accumulating a balance. Lenders know that. That’s why they get concerned when you have too many active accounts. Lenders want to feel assured that you can handle their monthly payment. If you have too many active cards, their payment may not be your top priority. Also, too many active credit card accounts can mean that you are just a person who likes to use plastic, and all the bank lenders know that that means trouble somewhere down the line.
Why should you care? Because lenders are the ones who lend you money for a Home mortgage, a car loan, or a personal loan. If any of these are goals you have, you won’t be able to reach them if you don’t curb your plastic use.
Finally, if you are routinely bombarded with credit card applications, don’t make the mistake of thinking that you have an excellent credit rating. It doesn’t mean that. All it means is that the credit card companies have figured out how much money they make off of consumers who accumulate credit card debt. Don’t be fooled!
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