Why You Should Carry Only a Couple of Cards...
It’s tempting, all those credit card offers that come tumbling into your mailbox, both through snail mail and now they’ll even proposition you through e-mail. Walk through the department store and they ask you religiously if you’d like to try their credit card. In fact, they’ll even try to convince you that you’ll be saving money by taking an additional 15% off your purchase today with credit approval. It’s easier than cash, it’s faster than debit cards, and you can find yourself with tens of thousands of dollars worth of stuff you didn’t have to pay for. Yet. If you value your credit you should be saying no to credit card offers.
Of course credit cards make the world a more convenient place and we all carry at least one, even if it is cleverly disguised as a check card attached to our bank accounts. Either way, who wants to carry around hundreds of dollars in cash for a day of shopping? Who wants to wait for three more pay checks to come in before we get what we really want? The fastest way to get those credit card offers to stop is to use them all and then try to pay for them, along with the interest rate, on top of daily and monthly expenses. Once your credit score bottoms out, don’t worry, they’ll stop offering you any credit cards at all.
Learning to say no to credit card offers will save your credit as well as your bank account. Carrying one or two can make life a little easier, provided that you know how to use credit wisely. However, once you start making a lot of credit card errors, getting something like a home loan or a car loan becomes much more difficult.
Every credit card comes with its own interest rate, as interest is the way a credit card company makes its money. Though it may seem simplistic for an explanation, it’s important to understand how credit card companies operate. They agree to let you spend their money in return for paying them just a little bit more than you would have paid if you spent their own. Mot credit cards linger around the 5% mark, so for every dollar you allow them to purchase for you, you give them 5 cents. Doesn’t seem like a big deal. Until you have six credit cards with balances over $1000. Even if you paid the all off right away, at 5% interest, you now owe each credit card company an additional $50. $50 for all six credit cards is now $300 in addition to the $6000 you owe them just for buying the stuff you wanted.
The money that you are willingly handing over to credit card companies would most likely be better served in other avenues. Here’s the kicker. Few people are able to pay off their credit card balances all at once, and carrying a balance means you are paying more interest. Your minimum monthly payment is going toward interest rather than principle. It can take twenty years to pay of $1000 worth of credit card debit by paying the monthly minimums, and in twenty years you have paid the initial $1000 over and over and over again.
There certainly is merit in carrying one or two credit cards. It can just seem so easy when so many different companies are willing to extend you credit. You accept because they waive the fee for the first year and they lower the interest rate for the first year, and they tell you you’re getting a good deal. Don’t forget that credit card companies are in business to make money, and they aren’t going to offer you a deal they’re likely to lose money on. In order for their good deal to seem appealing, you’re going to have to end up paying them back down the road. The more credit cards you have, the more you are going to have to pay back, and the easier it is to get into some serious trouble. Credit card companies are not interested in anything other than their bottom line, thus you should be equally as vigilant about your bottom line.
Credit card offers tend to make us feel good on a very subconscious level. It’s a statement of society’s trust that we are doing okay in the financial world since people are out there hoping we’ll let them lend us money. It’s a rite of passage as a young adult and it is a ego stroker even when we don’t realize it. When we get to the point that we find credit card offers annoying is when we realize that the financial validation of our own surroundings is more important than that of a company who really just wants to make money from our purchases.
Despite the 15% that you might save at the register or the three credit cards “just for gas” and the tempting offers to have a credit card for each of your favorite clothing stores, learning to say no to the credit card offers is the easiest and most assured way to help protect your credit.