By Christina Lavingia
With the abundance of credit card offers found in mailboxes, advertised on TV and offered at retail stores, it’s no wonder Americans have a crippling amount of credit card debt. According to CreditCards.com, the average American had 1.96 credit cards in 2012, down from 3.7 in 2009. Credit card debt per U.S. adult, excluding zero-balance cards and store cards, was $4,878, although those who regularly carry a balance had almost double the debt at $8,220.
Plastic already disassociates consumers with the actual dollar value of their purchases; multiple cards only make this problem worse. Here are 10 ways to tell if you have too many credit cards.
YOU’VE RUN OUT OF SLOTS IN YOUR WALLET
Your wallet might be equipped with eight card slots, but that doesn’t mean you should have eight credit cards. Between your driver’s license, gift cards, frequent buyer cards and membership cards, those slots should be filled with some plastic that doesn’t come with a link of credit. Too many credit cards make it difficult to keep track of which charges were made on which cards, and hence, make it harder to maintain a budget. Plus, the more cards you have, the more damage a thief could do should your wallet be misplaced or stolen.
YOU CAN’T REMEMBER WHICH RETAIL CARDS YOU ALREADY OWN
You’re out shopping and you are asked by the checkout attendant if you’d like to open a retail card with the store today. The opportunity to save 15 percent off your purchase is tempting, but you can’t remember whether you already have a card with this retailer or not. That’s a sign that you likely give into retail marketing a little too often and have way too many cards.
YOU’VE BEEN DENIED ADDITIONAL CREDIT CARDS
You might have had a perfectly easy time qualifying for your first credit card and maybe the second, too. But depending on your line of credit and eligibility guidelines, you might have a hard time qualifying for another. If you’re applying for more credit cards and finding only rejection letters in the mail, it’s probably because your high credit utilization ratio and multiple credit inquiries are red flags to creditors.
YOU CAN’T REMEMBER THE MAILING ADDRESS ASSOCIATED WITH A CARD
When making purchases online, you always have to include a billing address, and if you’re trying to make a purchase but can’t remember the address associated with the card you’re using, it’s might be a sign it’s time to pull the plug on a card or two. Consider consolidating your credit into fewer cards if you can.
YOU CAN’T KEEP TRACK OF YOUR SPENDING
Tracking your spending can be difficult, but putting your expenses on multiple credit cards with different payment due dates doesn’t make financial management any easier. If you can’t tell how your credit card debt is adding up, or where your paycheck is going at the end of each month, you likely have too many credit cards to keep track of.
You can’t build savings if you don’t know where your money is going each month. If you’re relegated to a paycheck-to-paycheck existence on a sizable salary and can’t figure out how you’re left with so little income after basics, like food, housing and transportation, it’s time to look at your account statements to see when deductions are being made and to where. If you’re only charging $100 or less to a card monthly but are forgetting to pay your bill, that purchase could cost you big time in the form of higher interest rates and late fees, not to manage dings to your credit report.
YOU HAVE TO SCROLL TWICE ON MINT TO VIEW ALL YOUR CARDS
Financial tools like Mint can be incredibly useful when trying to stick to a budget and manage your funds. However, if you’re financial management portal is filled to the brim with accounts, you likely need to consolidate your cards.
Mint and other online banking tools can be useful for tracking spending, but ultimately, too many credit cards could easily put you in the hole regardless of how meticulously you track your spending, thanks to an overwhelming supply of credit. Sometimes less is more.
YOU’RE GETTING HIT WITH LATE FEES
There’s no excuse for paying a late fee when you have one credit card, but when you have multiple, it can be incredibly difficult to keep track of payment due dates. If you’re regularly getting hit with late fees and can’t keep payment due dates straight, it’s time to ditch the credit cards you’re barely using. The amount of money you’re spending on late fees, and possibly annual fees, could be used to help cover the costs that you can’t handle without credit currently.
YOU OPEN NEW CARDS BECAUSE YOU MAXED OUT OLD ONES
Another credit card is not the answer. Everyone wants to maintain their ideal standard of living, but it’s not always financially realistic. If you’re too focused on keeping up with the Joneses, you’re not doing yourself any favors financially.
It’s time to go back to the basics: draw up a budget, follow a few best spending practices (such as the 50-30-20 rule) and live within your means. The days of having to open a new credit card out of necessity will become a distant memory.
YOU HAVE TROUBLE EARNING REWARDS
You know you’ll be charging many of your purchases on a card, so you figure why not earn rewards at the same time? The problem with having too many credit cards, and too many rewards cards, is that your spending is diluted, making it nearly impossible to accumulate enough points on any one card to earn rewards or substantial cash back. Even if debt isn’t an issue for you, multiple credit cards will inevitably divide your spending and prevent you from making any headway in a rewards program.
YOU HAVE A STACK OF CREDIT CARDS YOU NEVER USE
If you’re the type to have a go-to credit card and a couple “emergency” credit cards, you’re not doing yourself any favors. If you have a stack of credit cards that you don’t ever swipe but are in service and usable, you’re only opening yourself up for fraud, lost cards and inactivity fees. For all you know, there could be a lost credit card in your sofa cushions that you haven’t realized is missing.
Cut down on the “what if” cards and focus on what you need right now. Is it a monthly credit limit of $1,000? $5,000? Wipe the slate clean and consolidate any debt you have onto one or two cards that give you a credit limit within your budget.
Christina Lavingia writes for GOBankingRates.com (<http://www.gobankingrates.com>), a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.