How Many Credit Cards? - And How to Reduce Credit Card Debt?

Q.: How many credit cards should one person have?

A.: The short answer is: two! One for every day purchases of things that one would buy in cash anyway, things like groceries, gas, dry cleaning, utilities, etc.. , and pay off the balance of this card in full every month. The second card is for emergencies, and you know what emergencies are. Of course a vacation because I am stressed is not an emergency, neither is holiday shopping.

And now, for the long answer.

The short answer above is for the ideal situation, but according to recent statistics, most Americans are carrying large balances on their credit cards, so if you are one of them, how many cards should you carry? 2%2B1.

The every day card (and make sure your spending doesn't get out of control), the emergency credit card, and the third credit card where you have the balance that you are carrying. If you are carrying balance on multiple cards, consolidate. If you can't consolidate it means that your credit is not that good.

Hold on tight, there's a 15 step solution:

1. Pay ALL of your bills on time, not just the credit cards, but the utilities as well.
2. Make a list of the interest rates on your credit cards, and sort it in descending order, with the highest interest rates on top of the list.
3. Do not charge ANYTHING on these cards, do not charge anything on your emergency card, and do not roll over the balance on your every day purchases card either.
4. Compute the total of the minimum payment due on all your cards, this is your monthly consumer debt servicing amount; let's say it's $ 500.
5. Call each and every single credit card company, and ask them to lower your interest rate, otherwise you'll be transferring the balance somewhere else. Unless your credit is really terrible, you'll be successful with at least 50% of your cards.
6. Each month pay the minimum on all the card except for the one with the highest interest rate, after calculating how much you've paid on all the other card, make a payment to the card with the highest interest rate equal to $ 500 minus what you've paid to all the other cards. As times goes by, the balances in all cards will decrease, and the monthly payment will decrease accordingly, hence you'll be paying off the first card, the one with the highest interest rate, in no time. Or at least fast enough.
7. Once the first credit card is gone, close the account. And I mean close it, call the credit card company and tell them that you want to close that account pure and simple. They'll try to give you a hard time, they'll try to tell you just don't use it. This is an attempt to keep you where you are, maxed out on credit and paying high interest rates. No matter what they tell you, remember that these are the credit card companies that charged you the highest interest rates. You want to be giving your business to those companies who are helping you out with lower interest rates.
8. Each month continue paying the minimum payment on all the cards except for the one that has the highest interest rate, for this card you send in a payment equal to $ 500 minus the payments that you've sent to all the other credit card. Yes, it's not a typo, you still send the $ 500 each and every month to lower your total debt, no matter who has it.
9. If you come across some extra money like overtime work, bonus, cash presents, selling stuff from your basement on eBay or Craigslist, send a separate check for that amount to the credit card with the highest interest rate. Your present is the present that keeps on giving, you are getting out of debt.
10. In the meanwhile, you'll be getting offers in the mail and phone solicitation for new cards, don't do anything, you don't want extra inquiries into your credit report.
11. After 7 full billing cycles have elapsed since you called all of your credit cards asking to lower your interest rate, do it again. Call them all, the ones who did lower your interest and the ones who didn't. 6 month of paying each and every bill on time makes a lot of difference.
12. For the next 15 days keep an eye to your mailbox for 0% balance transfer offers, read the fine print for fees, length of the 0%, and other rules that might not work for you. You want 0% for at least 6 month. Some cards offer up to 12 months and once in a while some cards offer 0% for the life of the balance. Make sure NOT to charge anything on that card and that you still benefit from the 0% even if you don't charge anything on that card.
13. It's OK to do the balance kiting, transferring the balance every 6 months from one card to another, you will find that you might end up with 2 cards, transferring the balance back and forth every 6 months from one to the other.
14. Continue on the same plan, paying $ 500 a month toward all of your credit cards, making the minimum payment of the credit cards with lower interest rate, and sending extra money to the card with the highest interest rate.
15. You'll be debt free in no time.

Jennifer Fiorenza is a personal finances enthusiasts, who has discovered the remarkable importance of good financial habits as a component to your everyday life and long-term happiness. She's presently a freelance marketing specialist at Credit Cards Mojo. You can learn more by visiting her website at http://www.CreditCardsMojo.com/