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How many credit cards do you need?

by Francine Huff

How many credit cards do you need? Some people who warn against taking on too much credit card debt would say zero, while others recommend keeping a card for emergencies. Here are a few things to consider when trying to determine how many credit cards to keep in your wallet.

A Juggling Act

Having too many credit cards can cause problems, especially if you aren't good at keeping track of purchases. Credit card debt can sneak up on you with one card, so juggling multiple cards can be an even bigger drain on your finances. It's a good idea to limit yourself to just one credit card if you haven't disciplined yourself to keep receipts or write down all purchases. At the end of the month when you receive the credit card statement, it is easier to keep track of the interest rate and payment options.

Credit Cards for Business

It's important to separate business and personal purchases if you run your own company. Using a business credit card can help you do that. Having a separate credit card for business allows you to track expenses better, and makes preparing tax returns much easier. Also, if you work for an employer that gives you a company credit card, never use it for personal expenses.

Internet Purchases

Some people designate one credit card for all Internet purchases as a safety measure. If you shop online a lot and worry about identity theft, having a credit card for this purpose could make sense. You could also consider signing up for a credit card that offers virtual numbers that can be used online for one purchase.

Prepaid Credit Cards

Prepaid credit cards are another way to minimize your risk online. Just keep in mind that prepaid credit cards require you to deposit money into an account before making purchases. You also pay fees each time money is deposited. Prepaid cards are often used by people who have bad credit and can't get approved for credit lines. However, getting a prepaid credit card could make sense if you are planning a trip and want to load up a card to pay for all the expenses.

Shop around and compare credit card deals before signing up for an account. Credit card rates, fees, rewards, and other perks differ so make sure you get the features you want, especially if you are limiting yourself to one card.

Published 06/13/12 (Modified 06/27/12)

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