5 Tips To Take Control Of Your Finances

5 Tips To Take Control Of Your Finances

Do you know where to start when it comes to your finances?

Grabbing the money bull by the horns is one of the most difficult things to do, especially when it comes to credit cards.

For some, credit cards are an absolute household necessity and a resource which is relied upon heavily. Others cower in fear of credit cards, not understanding their purpose or life-building potential.

You need to be somewhere in the middle. However, taking control of your finances doesn’t end with understanding how many credit cards you should have.

You need to understand how those cards can affect you, both positively and negatively.

There’s a whole slew of information out there on how to get straight with your money. Much of it is confusing at best. How do you know which advice to follow?

We’ve created this how-to guide just for you, the savvy individual who wants to manage money responsibly. Follow these tips to get control of your finances today.

How Many Credit Cards Should I Have? Learn About Your Credit Score

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Knowing how your credit cards affect your credit score is half the battle.

Credit scores can be an incredibly confusing animal. We’ll define them here in a way you’ll easily understand.

According to Credit Karma, your credit score is a number made up of three digits. These digits are defined by the three major credit bureaus here in the states: TransUnion, Equifax, and Experian.

According to Credit Cards, your cards are one of the main factors in maintaining a good credit score, though other debts like student loans and car payments come into play as well.

These bureaus collaborate to give you a credit score based on your previous payment history. If you miss lots of credit payments, your score goes down. If you always pay on time, you’ll maintain a higher score.

Knowing your credit score is the first step to controlling your finances. In order to check your credit score, inquire to one of the three bureaus and ask for a report.

How Many Credit Cards Should I Have? Raising Your Credit with More Credit Cards

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Sometimes, having more credit cards can help you build a better credit score.

Experian explains that when you have more cards, you reduce the balance-to-limit ratio. This is the percentage of what you owe (your debt) compared to your total credit limit.

The reduction occurs because when you have more cards, you have a higher credit limit. But you have to watch your debt too.

The higher your limit is, and the lower your actual debt is, the better your score.

However, it’s not really a good idea to apply for a bunch of cards in the hopes that you’ll raise your score. This will cause issuing companies to run lots of credit checks, which can make you seem like you want a really high limit in a short amount of time.

Because of this, they may believe you’re less likely to pay them off.

At that point, your score is actually lowered. So if you want to raise it by getting more cards, accrue them slowly and over a period of time.

How Many Credit Cards Should I Have? Don’t Miss Out on Bonuses and Rewards

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Managing your finances responsibly means taking advantage of the credit opportunities out there. And the number of cards you have can actually make you money, according to Forbes.

Some credit cards offer rewards and bonuses, so you may want to get in on that. Especially if you travel a lot, you’ll want to get in on a travel rewards card. It’s best to wait until you have already established a good reputation on a basic card before getting a rewards card.

How Many Credit Cards Should I Have? Running a Business and Running a Life

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An important question to ask yourself is what exactly you hope to achieve with multiple cards.

In some cases, different cards will help keep you organized and on point. If you run a business, you’ll be able to know exactly how much you’re spending on gas, uniforms, etc.

Having more cards (that you manage responsibly) makes you appear more trustworthy to potential lenders and investors as well.

However, having too many cards is confusing and can get unmanageable fast, especially if you have no real reason to possess them.

How Many Credit Cards Should I Have? Managing Your Cards Responsibly

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It can be good to have more cards, but Nerd Wallet explains that it isn’t vital.

It’s much more important to build your credit score using safe and responsible tactics with your credit card. Only when you use these should you think of getting more credit cards:

  • Pay the entirety of your bill on time every month.
  • Keep track of your spending.
  • Don’t spend more than you can easily pay back.

How Many Credit Cards Should I have? As Many as You Like

Credit cards are a great way to build credit, but don’t get overwhelmed. As long as you’re making payments on time and in full each month, you’ll be building good credit regardless of how many cards you have.

So get out there and apply for one! It’s up to you to control your finances responsibly.

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Harry Romero

Harry worked as an economist for about 8 years after graduating from a college degree in the field. After a while, his sales department job slowly transitioned to becoming more of a professional reviewer of various consumer electronics.
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