The temptation to open a new credit card seems to be everywhere, especially when you’re not looking for it.
Just the other day, I was shopping online for home décor and at checkout I was promoted to open a store credit card to save on my purchase. I was so tempted to click “Yes” and complete the request, but I hit the pause button.
How often would you use this store card? Would you end up spending more because you would have access to sales, promotions and special offers? I shook the thought from my mind, as I had so many times before.
After having more credit cards than I needed (I closed two of them over the years and only kept one), I promised myself in my 20s that I would not open any new personal credit cards. I have one that I chose because it is the airline I fly with two or three times a month and I found that travel rewards worked well for my goals and lifestyle.
One card is all I need even though many people praise opening multiple cards and using the benefits. I have found myself in many intense discussions with friends and financial experts about this rule that I have, but I will not break down or give in. Here’s why I refuse to have more than one personal credit card.
1. Having only one card will keep me debt free
I found that when I had three personal credit cards, I always forgot to pay all the bills on time and spent more than my budget. I looked at the balances at the end of the month and realized that I could pay off one of the three cards and have to make minimum payments on the other two.
Before I knew it, my card spending was so out of control that I was only paying the minimum payments on the cards and watching the debt grow.
Jordan Tarver, a financial analyst, says that opening multiple credit cards will give you access to more capital, which means that if you have bad spending habits, you can easily abuse your credit cards and fall into an endless debt trap.
“Having just one card will help you spend within your means and keep your credit card balances at a manageable level, helping you control your debt and even build a debt. credit rating solid, “says Tarver.
With a card, it’s easier to check balances (weekly) and limit spending. Having more cards to choose from eases the temptation to put something on a credit card.
2. Cash is my priority
Juggling multiple cards became a complicated brain game. He had multiple options to pay for things he didn’t always need, but bought for convenience. He even had each of the cards linked to different online stores that he shopped at. All of this made me ignore my monthly budgets and accumulate things that I didn’t need.
When I switched to having only one credit card and used a cash envelope system (At the beginning of each month, I kept cash in marked envelopes that indicated how much I was going to spend that month in different categories like groceries, shopping, and entertainment), I was able to save quite a bit of cash, be debt free, and shop smarter.
3. I want to maximize the rewards
One of the reasons opening credit cards can be tempting is because of the rewards, including registration bonuses . Some people like to have a credit card with cash back and others like to have some credit cards with travel rewards.
Karra Kingston, a bankruptcy attorney, says that many times people open up too many lines of credit due to the incentives offered by credit card companies.
“The problem that often arises when people seek these credit card incentives (ie no interest for a year, travel rewards, or money back) is that when interest is due, people cannot make payments of all your credit cards, “says Kingston. “This is generally the reason why people find themselves bankrupt.”
This was a trap that I almost ran into when I played the game of opening multiple cards just to get rewards. I found myself spending more, especially during the first few months of having the card open, in order to meet minimum spending needed to get that initial bonus reward.
In the end, the rewards of all these cards were hardly worth it and it was more worth it to have an open credit card, where all my spending was done and in return, I got travel reward points. I found that I could get anywhere from 500 to 750 in travel rewards by keeping all purchases on one card than when I had multiple cards. The rewards were much less when they were divided into three cards.
4. I know I won’t use store cards very often.
Although I always think for a few seconds about saying yes to credit card offers, especially from stores, I always remember that I will not use most of these credit cards as much as I think, and some cards even have penalties if you don’t use them. Don’t slide a certain amount of transactions per year.
By having many credit cards open you always run the risk of losing them, not realizing it, and having to deal with credit card theft.
5. I want to keep my credit score
When I decided to close my other two credit cards, I had to do it over the course of two years to protect my credit score, which can go bad when you close the cards.
But your score can also go down if you have several open credit cards that you don’t use or don’t pay on time.
Another thing that slows my desire to open new cards often is the advice Valerie Moses of Addition Financial, a credit union, gave me.
“While opening new cards can be tempting, too many inquiries on your credit report can make it seem like you’re overloaded and unable to make your payments,” Moses said.
I thought that with just an open card, I could manage my expenses and pay my balance on time. I could also better control my credit utilization rate (which is the amount of revolving credit you are currently using divided by the total amount of revolving credit available) with just one card that I paid close attention to and paid weekly if my expenses increased for any reason.
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