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On Managing Multiple Credit Cards Without Ending In Debt

man holding multiple credit cardsA lot of people have learned their lesson when it comes to debt. They want to keep themselves from this dreadful credit problem because it is very easy to fall into it and tough to get out of. The high interest rate and the finance charges are enough to grow your debts into an amount that is difficult to recover from.

Sometimes, consumers choose to avoid credit card debt by eliminating these plastic cards from their lives entirely. There is some logic to this because if you remove the temptation to spend, you will not land in debt. But then again, that is not how you solve the problem. The real culprit here is your inability to control yourself. Instead of disciplining yourself, you will sacrifice your credit score by cutting off your multiple credit cards. Closing an account decreases your credit rating and that can prove to be damaging for any financial opportunity that you may have in the horizon.

While financial experts advise that you should only own one or two accounts, what can you do if you already have multiple credit cards? Well you have the option to keep them.

Tips to retain several credit cards and still be debt free

Keeping several credit card accounts can be a risky move but only if you do not know how to manage them properly. There are techniques to make sure that these multiple accounts will not land you in debt.

  • Define the purpose of each card. It is important to categorize where you will use your card. Make sure you use it where it is most able to get rewards. There are credit cards that are great for travelling and there are also cards that will give you great discounts in groceries or restaurants. Know your multiple credit cards so you can maximize the benefits that you can get out of them.

  • Budget the use of your cards. Now that you know the purpose of your cards, you should make sure that it is plotted in your budget plan. For instance, the credit card for clothes must have a specific budget every month. The same is true for your food and groceries. If you use your credit card for these, you have to allocate a budget for each and put it aside. Do not spend that cash for something else.

  • Pay your balance in full every month. The reason for the previous tip is to enable you to pay for your balance every month. This is how you stay away from finance charges and the effects of high interest rates. This is how you stay out of debt.

  • Do not be late with payments. Another factor that can increase the amount that you have to pay for is when you do not meet the deadline of your credit card payments. Since you have multiple credit cards, it may be beneficial for you to have the dues dates fall at the same time and right after a paycheck is released. This will keep you from forgetting to pay them.

  • Track your expenses carefully. It is also very important for you to track your expenses. Do not wait for the billing statement to arrive before you take note of what you are spending. If you are scared that it can be tedious, you can check out ComputerWorld.com. They have a list of smartphone applications that can help you track the expenses that you make every month – both for cash and credit transactions.

  • Get rid of credit cards that charge annual fees. If you own cards that charge annual fees, have them waived. If not, downgrade them to an account that does not have this fee.

It is possible to own multiple credit cards as long as you can stay organized. If you can control where you use your credit card and you are never reckless, then the chances of you landing in debt will not happen.

Reasons why you still have a lot of cards

Point in fact is, credit cards can help you enjoy a better future. It does have benefits and it goes beyond the cashless transaction. There are many reason why you would want to keep your multiple credit cards and here are some of them.

  • You can’t afford to lower your credit score at the moment. As mentioned, closing your credit cards will affect your credit score. So if you are gearing up to make a huge loan for a home or a business, you might want to refrain from closing your cards. This will lower your score.

  • You want to categorize your credit spending. One card to pay for all your expenses might be a bit more difficult when you want your spending categorized. Having one card for certain expenses will help make category spending easier to track.

  • Your lifestyle is able to benefit from reward points. If you are the type who is able to maximize the rewards for various credit cards, then feel free to keep all your credit accounts. These rewards can save you a lot in the long run – as long as you pay the full balance of your debts on time. That way, you only pay for the value of what you purchased.

  • You don’t have a problem with credit card temptations. Lastly and probably the most important reason is you have no problems curbing the temptation of spending on your credit card. People who cannot control their spending and does not have the discipline to track their expenses will not benefit from having a lot of cards.

As you can see, changing your habits will allow you to enjoy the perks and benefits of using multiple credit cards. You don’t have to eliminate it totally from your financial life.

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