by Stephen H

Created on: December 31, 2009   Last Updated: March 08, 2011

Most people have at least one credit card or store card.  Some have quite a few more.  But when does it get to the point that you have too many?  We've all had times when we have had difficulty with money or come across some bargain in our favorite shop that is just too good to miss or are desperate to buy an item that we can't quite afford.  So what do we do when we don't have the cash to pay for it?  Use a credit card is the answer for most of us.  Credit cards are used to purchase goods and services with payment deferred to a later date.  This makes them one of the most popular payment methods for most shoppers in the western world today. They operate on a simple principle, when you purchase goods or services using a credit card, the card provider pays the required sum to the retailer and you, the credit card holder, then repays the sum owed to the credit card provider at a later date.  It is a very convenient and easy way to borrow money.

You do not have to pay the full amount borrowed in one payment; you may spread the repayments over a number of months, although the card provider will charge interest on the outstanding balance for allowing this facility.  This interest is likely to be quite substantial.  Some credit card providers will also charge an annual fee, which will usually come with some other benefit, such as free travel insurance.

The use of credit cards, even though one of the most expensive ways of borrowing money, is extremely high. The main reason for this is the convenience of being able to purchase without pre-arranging a loan and the flexibility of being able to pay over a number of months at your own discretion, within the requirement to make a minimum payment each month.

Also, the use of credit cards for remote shopping, across the internet or by phone, make them almost a necessity in this technological age and the advent of so many goods and services available online.

When you think about whether to hold a credit card, and if so how many to hold, consider that when you borrow money on a credit card, there are rules that you must follow:

a)  There will be a minimum amount that you must repay the provider each month, usually expressed as a small percentage of the outstanding debt, eg 2.5%.

b)  You will be advised of a credit limit and this is not to be exceeded. The level of the limit will depend on your income and the card provider’s

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