Does your wallet look as if it were 8 ½ months pregnant? Does it take you five minutes to sort through your credit cards before finding the one you want to use for a particular purchase? If so, you’re probably suffering from CCO or Credit Card Overload. Millions of Americans suffer from this affliction. In fact, according to CreditCards.com 18% of all Americans carry 3 or 4 credit cards, and 9% carry 5 or 6. If you count up the number of cards in your wallet and find you have 7 or more, you’re part of a group that numbers 8% of our population.
When you see numbers like this, it’s easy to understand why so many Americans are having a problem with credit card debt. Creditcards.com has also reported that Americans with credit cards are carrying $5121 in debt, and American households now have more than $16,000 in credit card debt.
How to put your wallet on a diet
If you’re one of the many Americans suffering from credit card overload, take heart. You could actually replace all of those cards with just one.
Where this starts is by doing an analysis of why you habitually carry a balance on those credit cards, and the kinds of rewards that are most important to you.
If travel is your thing
If you travel frequently then you should be able to slim down to the one credit card that offers the best travel rewards. As an example of these, the Capital One® Venture® Rewards Credit Card is currently offering 40,000 bonus miles after you spend $3,000 in the first 3 months of approval. And its rewards rate is two miles per dollar.
The BankAmericard Travel Rewards® Credit Card gives 1.5 points per $1 spent on purchases, and 20,000 bonus miles once you meet certain purchase requirements. And the Chase Sapphire Preferred® Card gives 50,000 bonus points and 2X points on travel and dining.
Of course, if you get one of these cards, you’ll need to shred all your others or all you’ll have done is added to your wallet bloat.
Credit cards if you carry a balance
If you have credit card debt, there’s one simple reason. You’re carrying your balances forward from month-to-month. Credit card debt can be very expensive. Your one credit card should be whichever one has the lowest interest rate. Check your statements. If you’re carrying balances on cards with interest rates of 17%, 18%, or even 19% then you’re spending a lot of money that’s just unnecessary. If you don’t have a low interest credit card, find one with an interest rate like the BankAmericard® Credit Card, where the interest rate can be as low as 11.49%, and transfer all your balances to it. Or, even better, if you can qualify for one of those cards that offers a 0% interest introductory rate for as many as 18 months, transfer your balances to it.
If you spend in just a few areas
Do you spend the most money in just several budget categories such as groceries, restaurants, or gasoline? Then, you’ll want to get rid of all those credit cards and replace them with one card that offers the best rewards on those things. As an example of these, the Chase Freedom Visa offers 5% cash back on bonus categories that rotate every three months. These categories typically include restaurants, gas, groceries, and wholesale clubs. The BankAmericard Cash Rewards™ Credit Card offers 3% back on gas, and 2% back at grocery stores and wholesale clubs. And American Express’s Preferred(r) Card Will give you an amazing 6% cash back at US supermarkets (up to $6000 per year in purchases)
If you hate fees
The biggest negative of those credit cards that offer whopping rewards is their fees. The harsh fact is that the premium travel cards generally have the highest fees but the most generous rewards. One of these can be worth it if the rewards you accumulate are big enough to outweigh the fee. If not, then your best bet is probably a cash back card that has no fee.
Before you close those cards
Closing all those credit cards but the one you’ve chosen is good but it can also be bad. Fifteen percent of your credit score is the length of your credit history or how long you’ve had credit. So, instead of closing those cards that have now become unnecessary, consider shredding them.
If you put your mind to it, and do the kind of analysis you’ve just read in this article, you should be able to eliminate credit card overload, slim down your wallet, and simplify your financial life.