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11/28/07

Spending on Credit Cards

Spending on credit cards can become a very large problem if you do not keep track of what you are doing. If a you have one credit card, it is easy enough for you to keep track of your spending. Additionally, if a credit card has a low credit limit, that limit will be a ceiling for your spending habits. Keep in mind that I am not suggesting that you use your credit card until you “max it out.” I am merely suggesting that the credit limit, if low, will prevent you from getting too deeply into debt.

As I stated, if you only have one credit card, it is relatively simple to keep track of your spending. However, what if you have more than one credit card? Two credit cards should still be easy to track, but what about three, four, or even five cards? At what number does credit management become difficult? This is the problem that many credit users face.

I was reading a survey in the October/November 2007 edition of Young Money magazine. The article stated that of the 670 college students that participated in the survey, 22% received at least 6 credit card offers per week. In addition, a separate survey in which 796 college students participated stated that 34% own at least three credit cards (specifically, 24% of the 796 participants owned more than three credit cards). Why is this relevant? This survey (although the survey sample is extremely small) shows that some college students have more than three credit cards. Here is the point; if you keep track of each credit card (let us say that you spend $100 per card) but you do not keep track of the entire balance on all cards, you can find yourself in a deep hole.

In your mind, you may think that you only spent $100, but when the bill comes for all the credit cards, you are going to be in for a rude awakening. What if you have five credit cards? $500 is very different from $100. The point is, you have to keep track of all your credit card spending as a whole.

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