It seems like there is always a new credit card on the market that is offering a ridiculous sign-up bonus. Every month, The Points Guy shares recommendations for the best credit cards and the appeal to get a new card is great. Although credit card sign-up bonuses are a great way to earn free flights and hotel stays, I’ve noticed that the more credit cards I have, the harder it is to manage.
One of the biggest challenges I’ve faced when managing so many credit cards (and an authorized user) is keeping track of all the category bonuses. Since each card earns a maximum amount of points per category, when trying to play the points game and align expenses to the right credit card, I use one card for gas, another for travel, another for dining and so on. So at the end of the month, I have balances on different credit cards. Can you see how things can get complicated?
It’s becoming nearly impossible to manage all of my credit cards and it has me wondering, how many credit cards is too many?
While I work on closing down a few lackluster credit cards to stay organized, I’ve decided to go back to the basics and use my debit card – it’s been years! Until recently, I only used them at the bank and ATM. However, after feeling flustered, I can see why Terri over at Terrific Words wants to become a points traveler without the credit cards. Nevertheless, for those who see the value in having credit cards, I recommend adding debit cards to the mix to better manage your finances.
Debit cards keep you accountable. When you use a debit card you are consciously deciding to pay through a checking account. The funds are withdrawn immediately and as a result, you can better track spending activity in real-time. With a credit card, it will take at least a day for the charges to post and another day for the payment to process making it difficult to track.
Also, you can easily lose track of multiple credit card balances if you aren’t keeping a close eye on all of your expenses. This can lead to hefty interest charges and late penalties. With debit cards, you’ll avoid all of these. All you have to worry about is having enough money in your checking account to make purchases.
I believe that a healthy financial plan can include both credit and debit cards. I found that using debit cards to make smaller everyday purchases has been very helpful in managing my finances. This way, at any given time, I can look at my checking account balance and know where I stand. I now use my credit card to make bigger purchases (as long as I can afford it). I still earn a substantial amount of miles and travel points every month and my spending is under control.
Try setting a minimum spending limit on all credit card purchases. Anything below that limit goes on your debit card.
I also loved Half the Clothes’ suggestion to compare your credit card and bank balance every day. Making sure your checking account can cover all credit card expenses is a great rule of thumb to follow.
Overall if you are struggling with managing too many credit cards, consider closing some of less lucrative ones. You can also try using debit cards to better track your expenses in real-time. Remember, the goal is to have good credit and a healthy and sustainable process in place to manage your finances. Taking advantage of the points game is secondary.
Do YOU use debit cards? Why or why not?
Danielle is a travel finance strategist, writer, speaker and podcaster. She paid off $63,000 of student loan debt in 4 years, bought a house at 27 and has traveled to 25 countries. She refuses to let her financial responsibilities hold her back from living life on her own terms.