Do You Really Need Another Credit Card?

by Fox Symes on September 5, 2013

Credit cards can be plastic magic, relieving pent up pressure and stretching a lagging budget just that little bit further. The credit cauldron may overflow in the beginning, after all, you’ve signed up to borrow X amount of money, you’re in the all clear and the first payment sheet hasn’t come yet. You’ve handled the one well enough, keeping up with the onslaught of interest hikes and monthly charges; your bank trusts you now, offering extensions and new cards. More security? Why not, you think. Put down the pen or close the contract browser; while a second credit card will have a minute positive impact on your credit rating, and may allow you to splurge here and there at the moment, ask yourself, can you afford it in the long run? Paying off one credit card is difficult enough in the post-GFC environment, going back for a second round may tip you over the edge.

New Dates, More Paper

A second credit card means a whole new schedule of charges and payments. Suddenly, there are two or more due dates to worry about; while it may sound hard to confuse, people just like you commonly pay the wrong balance for opposite cards, creating repayment issues, late fees and credit headache.

Spend More, Pay More

The more you spend, the more interest you accrue over the time it takes you to pay it off. Not only will you have double the debt, you’ll also find yourself paying off hundreds to thousands of dollars in interest – Imagine what else you could do with that money.

The Fragility of the Credit Report

Your credit report is essential to future major purchases; a positive history affords an investor more buying power in the housing market, pushes through home loans, finds it easier to be financed for a new car and continues to enjoy a good relationship with their banking institution. A second or third card invites chaos, encouraging you to spend more, whether you can afford it or not. Sky-rocketing expenses or spending sprees increase the chances of your credit rating dipping, as a second or third card signify you’re relying on borrowed money to live. Fall under the red line and you’ll soon discover what the relentless harrying of debt collectors and late night calls.

Paying the Bare Minimum

The repayment figure on your bill is not the recommended amount, but the minimum required to stay in the clear. Small payments like this chop the head of interest, without making a dent in the actual debt, luring card holders into a false sense of security. You can spend years paying off the very minimum and still owe your institution a sizable debt; by the time you pay a $2000 credit card back to nil, you’ve probably donated around $3000 in interest.
Remember, there is no such thing as free money. If you decide to go ahead and add another slip of plastic to your collection, research low interest cards and credit limit options honestly. Alternatively, it’s better to stick with cash – it’s yours, you’ve earned it and you don’t need to give it away for fear of a court summons if things go pear-shaped.

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