Credit cards - how many is too many?

Credit cards can be great when used properly, but they can also be a really difficult thing to manage if you have a lot of them and get carried away with spending.

We’ve all been there - in a store where we’re making a big purchase and we’re offered a discount if we take out a store card. You take it out, intending to pay it off and get rid of it - but you never find the time. 

That, coupled with lots of incentives for taking out more credit cards, can mean that many of us have several cards we’re using at once. 

Ask yourself the hard questions:

• Start with why - why do you really need more than one?
• Having more cards at your disposal makes it easier to spend money you do not have, especially if you lose track of how much you are spending.
• It might be that you have several cards because they all have outstanding balances and you can’t afford to repay them right now.
• Are you consistent with your repayments?
• Take a look at your repayment history: Keeping track of things like repayment dates, interest rates and minimum payments can be harder to manage if you have multiple cards. Missing payments because you've lost track can lead to increased interest rates and unnecessary fees as well as damaging your credit score.
• Is it costing you more than you realise?
• You may be throwing money away! If you’re not repaying your balances in full, you could be paying serious amounts of interest. You may also have credit cards that you don't even use, but they may still be accruing fees or charges for those cards simply for having them.

If you want to continue having multiple credit cards, what’s important?:

• Be proactive & realistic:
• When juggling multiple cards, it’s even more important to pay attention to your expenses to make sure you're not overspending. Your spending should be limited to the funds available in your bank account, not the available credit card limit.
• Be in the detail:
• What’s your payment due date? This is the most important date to know. If you want to manage multiple credit cards, keep track of this date for each card. This is the date you have to send money to the credit card company. If your payment isn’t received on or before that date, you'll get hit with a late payment fee and start racking up interest. If you’re not good at keeping track, set up a direct debit so you at least always make the minimum payment
• Statement closing date: Most credit card companies close cardholder statements on the same day each month. This date can be useful to know. It can be the difference between paying for a big purchase in 25 days or 55 days if you time things right (or wrong). It’s important to try and make sure you always spend within your means and can repay it straight away, but it’s always good to have a few extra days before it needs repaying.
• Do your cards come with an annual fee? If yes, it’s important to understand when your annual fee for that card will hit your account. 
• Are you getting the best deal?
• If you manage multiple credit cards with annual fees, review each credit card's benefits before this month. Consider downgrading to a no-annual-fee card if you can't justify the fee. You can also call the credit card issuer and see if they're willing to offer you a bonus to stay a cardmember.
• Remember you can always do a balance transfer and may be able to swap a card for one with a lower interest rate or fees. Try a site like MoneySuperMarket to see what’s available.

Can you take action?

If you’ve read this and thought - actually why DO I have so many credit cards, you can make a plan to get rid of them:

• If you have outstanding balances - see if there’s a better deal to get out of debt earlier:
  Make your current credit card debt cheaper by signing up for a balance transfer credit card. Check out what’s available to see if you can transfer an existing amount onto a 0% interest rate card. This can help you to make your debt more manageable and reduce the interest you need to pay to 0%. This may be able to help you pay them off quicker and get rid!
• Consider debt consolidation: If you have multiple cards with different balances, you could also look at options to consolidate that debt and pay it off with one lower interest rate loan. If you find that your spending with a credit card can easily escalate, paying them all off and closing the cards and then simply repaying one loan could remove the temptation for further spending, while ensuring the outstanding balance is eventually repaid.
  If you are interested in consolidating debt, click here to see if Salary Finance could help. By having one fixed repayment that is deducted from your salary (if it’s with Salary Finance) it will give you peace of mind that you will never miss a repayment again.
• Make it easy to do the right thing. Don’t allow yourself to be incentivised by credit card companies or retailers to spend more on your card. And definitely don’t get sucked into taking out any more. By only spending the money you have right now, you’ll avoid racking up more debt, and make more space to save up for the things you want and need.

Using one credit card to pay for something small each month or the occasional large online purchase that you know you can repay in full when the statement comes in, means you benefit from maximising your credit score and purchaser protection in case anything goes wrong, without getting into a debt disaster.