With the abundance of credit card offers found in mailboxes, advertised on TV and offered at retail stores, it's no wonder Americans have a crippling amount of credit card debt. According to CreditCards.com, the average American had 1.96 credit cards in 2012, down from 3.7 in 2009. Credit card debt per U.S. adult, excluding zero balance cards and store cards, was $4,878, although those who regularly carry a balance had almost double the debt at $8,220.
Plastic already disassociates consumers with the actual dollar value of their purchases; multiple cards only make this problem worse. Here are 10 ways to tell if you have too many credit cards.
Your wallet might be equipped with eight card slots, but that doesn't mean you should have eight credit cards. Between your driver's license, gift cards, frequent buyer cards and membership cards, those slots should be filled with some plastic that doesn't come with a link of credit. Too many credit cards make it difficult to keep track of which charges were made on which cards, and hence, make it harder to maintain a budget. Plus, the more cards you have, the more damage a thief could do should your wallet be misplaced or stolen.
You're out shopping and you are asked by the checkout attendant if you'd like to open a retail card with the store today. The opportunity to save 15 percent off your purchase is tempting, but you can't remember whether you already have a card with this retailer or not. That's a sign that you likely give into retail marketing a little too often and have way too many cards.
You might have had a perfectly easy time qualifying for your first credit card and maybe the second, too. But depending on your line of credit and eligibility guidelines, you might have a hard time qualifying for another. If you're applying for more credit cards and finding only rejection letters in the mail, it's probably because your high credit utilization ratio and multiple credit inquiries are red flags to creditors.
Late fees suck. They're also expensive. In fact, their only good trait is that they are often negotiable, especially if you've got an otherwise good payment history. Here's how to go about it, according to Hardeman:
"If it's the first time you've been late, pay your bill as quickly as possible, then call your bank. Explain the situation to them, and remind them that it's your first time. They may be willing to consider it a fluke and help you."
Another credit card fee that's downright insulting is the annual fee. And while this one might not be as easy as a first time late fee to wriggle out of, it can be done.
"Banks are often willing to waive your annual fee, especially if it's the first year, or [they] may offer statement credits or rewards points that may offset the cost of the fee," said Hardeman.
She also said that if you're thinking about canceling a card to avoid an annual fee, you should consider calling your bank first. "Closing accounts can affect your credit," she warned.
If you have more than one credit card, all with different due dates, along with other bills, making on time payments consistently can become more difficult than a circus juggling act. And dropping a ball can really hurt.
"Having a solid on time payment history is one of the most important factors used to calculate your credit score," said Hardeman.
One way to make your life easier is to align all your payment due dates. "Being able to synchronize all of your due dates can make it easier to remember your payments," she said.
But how do you convince your bank to alter your payment structure? In most cases, banks will probably be accommodating, since this is a win-win: they get paid, and you stress less.
The experts agreed that as aggravating as dealing with credit card customer service reps can be sometimes, it's always best to kill them with kindness. "Be friendly and positive," said Hardeman. "It seems silly to say, but remember that there's another person on the other end of the phone. We've all made mistakes, and they can choose to empathize with you."
She added, "While there's no guarantee they'll make the change, you lose nothing by asking kindly and calmly."This is the only confirmation action you need to take, and usually you will not be asked to re-key your card number."
Another credit card is not the answer. Everyone wants to maintain their ideal standard of living, but it's not always financially realistic. If you're too focused on keeping up with the Joneses, you're not doing yourself any favors financially.
It's time to go back to the basics: draw up a budget, follow a few best spending practices (such as the 50-30-20 rule) and live within your means. The days of having to open a new credit card out of necessity will become a distant memory.
You know you'll be charging many of your purchases on a card, so you figure why not earn rewards at the same time? The problem with having too many credit cards, and too many rewards cards, is that your spending is diluted, making it nearly impossible to accumulate enough points on any one card to earn rewards or substantial cash back. Even if debt isn't an issue for you, multiple credit cards will inevitably divide your spending and prevent you from making any headway in a rewards program.
If you're the type to have a go to credit card and a couple "emergency" credit cards, you're not doing yourself any favors. If you have a stack of credit cards that you don't ever swipe but are in service and usable, you're only opening yourself up for fraud, lost cards and inactivity fees. For all you know, there could be a lost credit card in your sofa cushions that you haven't realized is missing.
Cut down on the "what if" cards and focus on what you need right now. Is it a monthly credit limit of $1,000? $5,000? Wipe the slate clean and consolidate any debt you have onto one or two cards that give you a credit limit within your budget.
