Many people find the temptation to own multiple credit cards nearly overwhelming. However, credit cards aren’t the magic solution to financial shortfalls that they appear to be. There are a number of different ways that credit cards can lead to financial problems that might not seem obvious at first, but can cause serious repercussions that could last for years.
Overspending becomes a real risk
Studies have shown that a person who uses credit cards rather than cash is more likely to overspend in a couple of different ways. A shopper may buy a more expensive dress, pair of shoes or electronic item, for example, rather than choosing less expensive options when using a credit card. Someone might willingly pay double the listed price for a ticket to a sporting event or concert. Paying with a credit card doesn’t have the same impact as counting out twenty-dollar bills
It’s easier to ignore a monthly budget
It’s very easy for a borrower to forget how much money is available to spend on entertainment and luxuries when a credit card is used. Unlike cash, which ends the shopping trip once it’s all gone, a credit card can quickly be presented to pay for nearly anything as long as the credit limit isn’t exceeded. Paying off the credit card bill at the end of the month can become very difficult when spending isn’t tracked properly.
It costs money to use a credit card
The freedom a credit card offers isn’t actually free, although commercials claim otherwise. Credit cards come with annual fees. Cards that charge annual fees amounting to a few dollars a month might not seem expensive, but over a year they add up. The fees for five, six or ten or more credit card cards can become a real drag on a budget.
Ways to avoid the problems of too many credit cards
People who find that they have too many credit cards have some solutions, however. One of the best ways to handle credit card spending issues is to create a budget plan and follow it closely. Someone who has difficulty remembering to pay the credit card bill each month can set up automatic payment reminders. There are other ways to alleviate the problems too many credit cards can cause. An interested consumer can read here to get even more ideas that will help make using credit simple and budget-friendly.