by Jan Beukes

Created on: October 05, 2009   Last Updated: November 21, 2009

Credit cards can be our friend or our worst enemy depending on how we handle them. Handled wisely, they can help us purchase items with a level of insurance cover for those items should they be faulty or not delivered. Handled unwisely, on the other hand, they can bring financial difficulties and mounting debts which go out of control.

Presuming they are handled wisely, we might choose one credit card which we use to purchase all of our day to day necessities and settle in full at the end of the month. This means we have been able to afford all the items we have purchased within a set budget and will not pay interest on these purchases.

Some people like to use different credit cards for different purposes. For example, one company does not make charges when using their credit abroad. This saves you having to carry large amounts of cash or use credit cards that make hefty charges when used abroad. If you have saved for your holiday, these savings can then be used to settle the credit card in full once you return from holiday. This will then prevent interest being added to your holiday spend.

Another example is using a specific credit card for say grocery shopping because that card offers double loyalty points on purchases. If this is then settled in full at the end of the month, it will not get out of hand. It can also be helpful for budgeting if different cards are used for different categories of your monthly expenses.

It may be that you have high expenses attached to your work which you then claim from your company. Again, a separate credit card can keep these costs away from your personal finances and help prevent getting into a muddle and forgetting to claim for certain items.

When considering a larger purchase, for example a new suite of furniture, we have the choice to either 'save up' or 'buy now and pay later'. If the store is not offering 0% over a set term, it may well be worth applying for a 0% credit card if you are certain that you can afford the monthly payments which will enable you to clear the card by the time the 0% runs out.

Depending on income levels, it is possible then to have at least five or more credit cards all for specific purposes, all being handled carefully and to our advantage. The problems arise when only the minimum payments are made, are late, or missed. Once fees, charges and interest start stacking up onto the balance, it can become overwhelming. Should this happen and you find yourself in financial difficulty, it is always best to talk to the credit card company to come to some arrangement as soon as possible. It never helps to bury our heads in the sand and be in denial. In today's financial climate, it is possible to negotiate with credit card companies often getting them to reduce the balance by deducting the fees and charges they have made. There are useful sites on the web which can help give tips and up to date legislation. Much can be learned and lots of money can be saved or claimed back by taking the time to find the right kind of help.

In conclusion, it is not a question of how many credit cards is enough, but how many can be handled wisely and to our own advantage. Always remember that, particularly in this financial climate, we do not know what is around the corner and credit card protection is a must. Take advantage of 0% offers, but keep an eye on the date they run out and watch that you are not paying high interest rates.

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