Having Too Many Credit Cards Can Lead To These 4 Financial Problems

Credit cards in a row falling You might have heard people say that anything in excess can lead to trouble and the includes having too many credit cards in your possession. It might be surprising to hear that it can also relate to having too much money, work, and stress triggers. Too much money can lead to a life that can be morally questionable, too much work can land you in the hospital so does stress.

When it comes to credit cards, there are some people who doesn’t seem content to have just a few of them. They apply as much as they can and accept whatever cards come their way with no questions asked. According to Creditcards.com, the average consumer has about 2 to three cards with them with baby boomers having the most cards in their possession.

One possible reason for this is that having cards can give some people a false sense of financial security. This is because they equate their credit card limit with actual budget money they can spend every month. What they often fail to understand is that these cards are just credit extended to them by lenders. In reality, they can be compared to taking out a short-term loan every time you use them.

These short-term loans given by lenders disguised in shiny plastic cards are always due every month. There might different due dates for every credit card but the principle is that whatever has been purchased using the card, they have to be paid on a monthly basis. The statement comes in outlining the amount and all the details of the expenses.

Having too many credit cards can be a painful form of torture every month as you wait for your card statement. Although you might think that you can manage them just fine because you are only paying the minimum amount each and every time. Doing so makes you a favorite for the lenders because they get to earn a lot from interest and other fees that they will assess on your account in the succeeding months.

Potential problems when you have so much credit cards with you

If you are one of those individuals who seems to be “trigger-happy” when it comes to owning a card, here are a few possible financial scenarios you might encounter.

  • Spending more than what you can pay off at the end of the month. Having too many credit cards already says a lot about your impulsive behaviour. This can ripple out to your shopping tendencies where you could lose control and develop the nasty habit of spending more than what you can manage every month. This can complicate into a lot of financial problems starting with unmanageable debt, maxed out cards, and not to mention the possibility of coming up short in covering important expenses at home.
  • The annual fees add up every year. As you own credit cards, you would quickly find out about how annual fees can quickly add up to hundreds of dollars when you combine all of them. This is always a part of your card fees and lenders include this in the bill once a year or spread it out over the course of the year. According to Bankrate.com the average annual fee for a credit card is around 11.06%, if you have ten or more cards, you can only imagine how much they all total and the amount that goes to annual fees every year. Imagine if you can save that amount and over time be able to invest that money?
  • Overlooking payment due dates. This is one of the problems that can plague consumers who are way in over their heads with the number of accounts and payables they have to manage and keep track of every month. The more credit cards you have, the more monthly statements you have to deal with and the more challenging it gets to stay on top on all of them. This situation can lead to some missed payments and additional fees and charges racking up on the account.

Here is a video that can give you some tips with your credit card use:

  • Using one card to cover another. Think of having to hold a hot coal on one hand and as soon as it becomes too hot for one hand because you already have blisters from the heat, you transfer it to the next. But the problem is, it will soon be too hot for that hand and you would need to transfer it to the original one further complicating the blisters and making it worse. The same situation can happen to your cards if you ever try to pay off one with the other. You are just preventing the inevitable which is paying off the balance. The time will come when you really have to pay for the debt which might have already ballooned in amount because of all the different charges that has added up.
  • Credit score can dip with too many applications. Every time you apply for a credit card, lenders will perform what is commonly referred to as a hard pull on your credit score. This helps them determine how well you have been attending to your financial obligations and gives them the ability to determine the risk involved in extending you credit. This is part of the whole application process but what you need to be on the lookout for is your score dipping. Having too many credit cards can mean multiple applications which means several hard pulls on your score. Each pull will result to a dip in your score so multiple applications can result to a significant drop in your credit score.

How to address problems from having too much credit cards

If you are in this situation and already experiencing the problems mentioned above, here are a few tips on how to address them and get yourself out of that credit card mess.

  • Have a budget and stick to it. The number one most effective way of dealing with impulsive buying is having a budget and actually sticking to it. You need to sit down and be able to identify how much you can spend every month and stick to it.
  • Talk to your lender and ask for a decrease. There are instances when you can ask your lender to lower down your annual fees or even how to totally waive off the fee. Each lender will have different views and opinions on this request but there is no harm in asking. The worst thing that can happen is they tell you that it cannot be done.
  • Setting up payment alerts. You can ask your lender about it, you can set it up using your own personal calendar or even look for an app that can remind you. The idea is to help you be reminded that payments are coming up and you need to send them out to your lenders. If you already have too much debt to handle, you can look at debt consolidation to combine all your payments under one account. The beauty in this is that you only have to deal with one payment amount and more importantly, one due date to remember.
  • Cut down on the number of cards you have. One of the easiest things you can do is to cut down the number of credit cards you have to make it easier to manage the payments. But you need to proceed with caution because it can adversely affect your credit score. You might discontinue the card that carries the longest credit history you have. This can result to lower credit scores because credit history plays a big part in your score computation.

Having too many credit cards might work for some people but for most, it can be a financial burden that is hard to carry. It can result to too many financial complications that can make it harder for anyone to reach their financial goals in life.