How many credit cards do you need?

By Chesutiko

It's a tightrope walk these days between having enough credit cards to enjoy some financial wiggle room and having too many cards to keep up with. Deciding how many credit cards you need can be difficult, especially if you have never used credit cards before. Depending on your lifestyle, the number of credit cards you should have will vary. Credit cards are useful in that you are able to spend money that you don't actually have, so long as you can pay it back at a later date. This can work to your advantage if you keep up with your payments, or it can be a way of digging yourself into debt.

Before you get a new credit card, ask yourself if it's something you need or just something you want. In many cases, people just want credit cards to help them buy things they otherwise cannot afford. That said, if you are ever short of funds, credit cards can rescue you from a difficult financial situation.

Credit card advantages
Credit cards:

• Are a more secure way of carrying around large amounts of money.
• Can help you keep track of your expenses by providing statements at the end of each month.
• Are convenient to shop with.
• Can, used wisely, provide you with a good credit history.

Sometimes credit card companies offer benefits for using credit cards, such as cash back on purchases, discounts on products you buy with your credit cards, travel concessions, additional warranty coverage for the items you purchase, various insurance covers, etc. Having several credit cards means that you could potentially reap many of these benefits. So long as you can manage your credit card debt, this is all for the best.

Credit card disadvantages
The chief disadvantage is the potential to rack up substantial credit card debt. The more cards you have, the more likely your debt will increase. And because you are spending money you don't actually have, it is easy for you to dig yourself into a difficult situation. When you owe the bank money and are not able to pay it back, it will give you a bad reputation. Having a bad reputation with the bank may restrict you from other things such as qualifying for home and educational loans elsewhere.

So, how many credit cards do I need?
If you've gotten this far in life without a credit card, chances are that you may never need one. However, if you can see a way to use credit cards to buy things and pay for them at a later time without falling behind in your payments, then credit cards may be just right for you.

Perhaps the crucial question to ask is, "How much do I earn?" The more you earn, the safer it will be to take the risk of owning multiple credit cards. If you are unsure about handling several credit cards, it may be best for you to consult a financial adviser.

If you are confident in your ability to handle credit without abusing it, then go for it. In the end, the decision (and the responsibility) are yours.

Article by Chesutiko

Updated: June 3, 2009