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Credit Card Necessity
In any discussion of credit cards, it is important to point out that our current society requires that adults have at least one credit card, along with other debt which can be reported to credit bureaus, in order to assign a credit score. Without a credit score, one cannot make major purchases, such as cars, homes, boats, even appliances with time payments, and, in many cases, it is difficult even to rent an apartment or home, or to get a job. People today must have at least one credit card, along with a checking account, and perhaps one revolving debt from some other type of loan.
How Many Credit Cards?
The answer to the question of how many credit cards an individual should actually possess is not a simple one. Individuals who tend to be irresponsible with spending and who tend only to make minimum payments, can keep themselves out of trouble if they have only one credit card and try to use it only for emergencies. Others may have one for purchasing items on time and another one with a zero balance, to be used only for emergencies. With good self-discipline, this plan of having two cards is a good one.
The more credit cards an individual has, the more self-control is necessary. Those who make a practice of charging items throughout the month and then paying off all of those charges when the bill is due, have no problem with multiple cards. Many people have several different cards, each one for specific types of purchases – gas, groceries, medical and dental bills, clothing, etc. Again, if the balance is paid in full at the end of each month, this can be a great way of keeping track of expenditures, particularly at tax time. Self-employed people usually have separate cards for personal and for business use, just because it is easier to itemize all business expenses at the end of the year.
Age and Income
Two other factors are determining the number of credit cards is age and income of the debtor. Generally, the younger in age and the earlier in a career an individual is, the fewer credit cards he/she should have. As these young people age and move forward in their careers, they are ready for major purchases like homes. It is at this point that additional credit cards should be considered, in order to establish a good credit rating. The best way to do this is to charge a reasonable amount on each of 3 cards each month and then to pay off the entire balance when the bill comes in. This establishes good credit history that is the habit of paying one’s bills on time and paying them completely. Nothing helps a credit score more than this practice.
When to Tear Up a Credit Card
If credit card debt becomes a source of financial stress and worry, it is time to stop and reduce the number of cards one has. Cutting up one or two will not reduce the amount owed, obviously, but it will terminate the ability to charge more. Then, as each cut up card is paid off, the debtor can begin to breathe easily again and commit to not repeating earlier mistakes.
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