Graduating college and starting a new life on your own is a scary time. If you’re like most students, you already have debt, and you certainly don’t have piles of cash sitting around for you to splurge on a nice apartment, high-end furniture, and fancy work clothes yet. If you’re lucky enough to have a job lined up, your future is a bit more secure and there is less risk involved, but that’s no reason to become complacent about your finances.
Let me tell you a story about a girl I knew in college. She had a great job lined up with a nice salary, so when she left school, she got a credit card with a 12 month introductory 0% APR. She figured she could put all of her “necessities” – a security deposit on a nice apartment, an apartment full of furniture, and work clothes – on her credit card, and pay them off interest-free over the course of the year with her new salary.
It happened about a year ago. I needed to pay for something online and I realized I had no idea what my credit card number was. At the time it was a frustrating moment. I used to memorize my credit card number, and the inconvenience of having to get up out of my chair, walk over to my purse, pull out my wallet, and get the number from my credit card was an annoyance. But then I realized – I hadn’t bought anything online in so long that I had forgotten my credit card number. The minor annoyance was actually the sign of a big accomplishment!
I think it’s pretty safe to say that if you memorize your credit card number, you’re using it too much. Now, my fiancé will argue, “but I memorize my credit card number and I barely spend any money!” This is true, but he also memorizes my cell phone number, the birthdays of every family member and friend, and the FedEx account number of a stranger who said it out loud to the cashier while he was waiting on line (no, he doesn’t fraudulently use her FedEx account). There will always be exceptions to any rule, but for most people, whether or not you memorize your credit card number is a good barometer for your spending habits.
Since it’s a new year, I decided to take a good look into my credit card rewards program. I discovered that my rewards program, which offers rewards in many categories, is terrible in the category I care most about: statement credits. With a bit of research, I found a new credit card with cash back rewards that align very nicely with my spending patterns.
I went ahead and applied for a new credit card. And now I’m faced with a conundrum: what to do with my other credit cards. I have more than I’d like. I have two absolutely identical credit cards because one of them used to be a student credit card which was discontinued and the account was transferred to a new type of card, which happened to be identical to the other credit card I had. I also have obtained a few store credit cards over the years when I made large purchases and was tempted by the sign-up bonus. Assuming I’m approved for the new card, I will have six credit cards in all. The store credit cards are the ones I absolutely never use anymore, and am considering canceling.
When thinking about credit cards, there are two main factors to consider: your credit score, and any fees associated with the cards.