In this series I am covering the 24 tell-tale signs that you could be in financial trouble. Over the next few weeks I will be presenting these signs, how to identify them and tips on how to address the issue.
Today we wrap up the credit card topic by simply pointing out that if you have too many credit cards you could be in financial trouble. The real question is how many cards is too many?
The Number Doesn’t Matter
There isn’t a magic number that says anything above it is a bad thing. Each person will have their own number of cards that becomes too many. For some, having just one credit card is too many while others may be able to handle 10 cards without a problem. Don’t pay much attention to those who say you need to only have X number of cards or if you have X number you have too many. It really comes down to your personal situation so these blanket statements may or may not apply to you.
Finding Your Limit
If you have just one card and have trouble paying it off in full or have found you have reached the credit limit then the last thing you need is to get another card. Obtaining more credit when you are having difficulty paying for the debt you have already incurred is a recipe for disaster and it won’t solve your problem.
If your debt is under control and you can regularly pay for your purchases in a reasonable time and you aren’t maxing your cards to the limit you may be safe to handle another card. But just because you can doesn’t always mean you should. Ask yourself why you want the card, what benefit will it provide and then decide whether or not you really need it.
Don’t Fall Into the Trap
People generally don’t come into a financial crisis because they have one credit card with a $1,000 limit. People wind up in trouble because what starts out as an innocent single credit card can turn into two cards, then three, then four and so on until there comes a point where the individual can’t even keep up with all of the minimum payments. Credit is all too easy to get and people get carried away with the offers. When you combine multiple sources of credit with poor spending habits you will quickly see trouble arise.
Credit cards can be a great financial tool if used properly and they don’t always have to be avoided at all costs. But unless you know how to use them without going beyond your limits they can be devastating. Im sure you’ve heard the saying “guns don’t kill people, people kill people” before. The same holds true for credit cards: credit cards don’t put people in debt, people put people in debt. Like a gun, a credit card can be used for good or for bad. The item itself is harmless, but when put in the hands of a person they ultimately decide how it should be used.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
There is a saying, "You can't spend more than you earn." If an individual happens to draw on his/her credit for day to day expenses, that person is in trouble. My motto has been to pay off the balance in full - always. If I cannot pay off the balance then I do not use the card. It takes a bit of discipline but it is not difficult.