Your Credit Card Should Be Your Friend and Not Your Enemy

Your credit card debt management

We have all seen the entertainment act where the juggler is throwing bowling ball pins or even knives in the air and catching and throwing them all at the same time. Sometimes with as many as 5 or ten at a time! We are amazed at wonderment. How do they do that?

As consumers, we tend to do the same thing with our retail credit cards. We seem to have about 5 or 10 different cards some major cards and some department or store cards. Some are used for business, and some are for personal use, and some are just there, opened but not used much.

Next thing we know, we have more credit card debt than we know what to do with, resulting in the inability to pay them all off resulting in fees, extra charges, and a declining credit score.

In short, we manage to mismanage our credit cards.

It is easy to do in a credit-driven society. Credit and credit card should be your friend, not your enemy.

So here are a few tips I would like to share with you for your serious consideration.

Create a credit card spreadsheet

First of all, take stock of all the active credit cards and store or restaurant cards that you have and lay them all out on the table. Then start a purpose credit spreadsheet.

List each card on the sheet, the expiration date, the type of card and the current interest rate and how much is your current balance. This will be the first step in an analysis as to why you have them at all. Then have the last column that says why you have the card in the first place.

Now we admit that different cards have different uses. Specifically, many cards like American Express and Chase Sapphire come with perks and cashback bonuses that are very useful if used properly. You may find that you have cards that you have not even used for over 6 months.

Be candid and ask yourself why you even have them in the first place.

My wife just underwent plastic surgery. I cut up her credit cards.
– Anonymous

Separate your credit cards from major credit to store cards. For the store cards, what is the benefit to keeping it? Was it just because you happen to get $25 off your purchase six months ago at the checkout counter? Could it be that they have a zero percent financing on new purchases when you first opened up that card?

If you are not using your credit card, there is no reason for you to keep these cards, close it. If you’re worried about how closing your cards will negatively affect your credit rating, you may simply cut the cards and never use it again.

It is one less card for you to lose your identity on.

your credit card
Bacho Foto/

Do you need that many credit cards?

When it comes to major credit cards, you may need to ask yourself why you have 5 of them from 5 different banks. What is the purpose of each and every one of them? Can you do a balance transfer from one card to the other for a lower interest rate? That would be a wise financial move. Yes, if you can consolidate them to a lower interest rate, do that. You’ll be glad you did.

When do you need a credit card?

If you use different cards for different reasons, then make sure that you have that reason on your spreadsheet. Maybe one is for gas, one is for groceries, and one is for every other type of purchase.

  • Traveling. It will be more convenient for you to use your credit card when booking your travels. Paying by cash to most travel agencies and travel websites are no longer an option. If you’re overseas, it’s also always a good idea to carry a credit card with you in case of emergencies. The same is true with other internet purchases.
  • Protection. When you purchase something using your credit card, most of the time that purchase is covered by a purchase protection plan by your credit card company. In case there is some issue with the product or service purchased, and the merchant refuses to work with you, you can always ask for assistance from your credit card company to help with the dispute.

Here are some suggestions for managing credit cards.

  • Start with working towards maybe two major credit cards at a time. Close the rest out. About every six months, go major credit card shopping and see if you can get a better card with lower interest rates, balance transfers if needed, and maybe better perks. If not, keep the existing cards without opening more.
  • Consider getting rid of all store cards. Except for those retail outlets you shop at once a week or monthly. I really do not see the benefit of a store card with having 2 or 3 major credit cards with perks. Consider closing all the store retail cards. You do not need them! There are stores out there like VonMaur that offer an interest-free credit card with no monthly or annual fees. These are the type of store credit cards you should be using.

One will argue that closing all these extra cards will lower your credit score. Maybe so, but if you are paying off your charges every month anyway, the interest rate will not be affected. If you need better credit so you can increase your debt that you do not pay off every month, then you are defeating your purpose of managing your credit cards and your debt.

Simply put! Limit your active cards to less than four. You will be much happier with this juggling act!

BA in Accountancy, he entered the entrepreneurial world by starting his first online marketing business in 2004. He is passionate about personal finance, self-development, the stock market, and a digital marketing addict. He strongly believes that financial knowledge combined with self-discipline is the key to achieving financial freedom.  He is also an avid golfer and a 15 handicapper.

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