So once I started working in the big wide corporate world, I’ve been getting a lot of calls from credit card telemarketeers. And since it’ll be a couple of months before Singapore establishes its own Do-Not-Call registry, I figured I might as well have fun with these unwelcome calls when I get them:
Marketeer: Good morning sir, how are you today? Would you be interested to know about this new credit card that we’re launching?
Me: Good morning! Could you tell me what the meaning of life is?
Marketeer: …. I’m sorry sir?
Me: I think the meaning of life is INSTANT NOODLES!!! LOVELY GOLDEN STRANDS OF COMFORT FOOD COOKED IN 3 MINUTES – GIVE ME SOME OF THAT MSG GOODNESS AHHHHH!!!!
Marketeer: ;
The reason why we absolutely freakin hate these marketing calls is because we don’t need another damn credit card. Most of us cant keep track of all of ‘em as it is. Also, if you’re a dude, your wallet is probably already so fat with all sorts of crap that taking it out of your jeans pocket is like a freaking arm workout.
Previously, I blogged about setting up a system to pay your bills so you can optimize your credit score, and using cashback credit cards so you don’t have to spend 2 hours each month figuring out what to do with all your points. You’ve taken the brainwork out of most of the process, but now there’s a remaining fundamental question: how many credit card(s) should you own?
Too many choices
A cursory search on Google reveals that there are 105 credit cards you could use in Singapore. And that’s for our tiny li’ll population of 5 million people. My overseas friends reading this are probably faced with an even more mind boggling array of choices. And it doesn’t help that these damn marketing folks keep pushing new ones to us all the time.
There’s actually no right number of credit cards that you should have, but if I had to cough up a number, most people would probably do very well with just 2 – 4 cards. If you’re lazy and hate keeping track of your cards like me, you should be minimizing the number of credit cards you own. Why?
Why you should limit the number of credit cards you have
1. It helps you to take advantage of all the benefits they offer: I own three credit cards and I already have trouble remembering which places offer benefits for my cards. Most people would think that limiting the number of credit cards you own would limit your choices, but the opposite is often true – the more choices you’re faced with, the less likely you are to act on them. It’s counterintuitive, but limiting the number of cards you own makes it easier to stay on top of what you’re eligible for, making it more likely for you to realize your credit card benefits.
Also, concentrating all your spending on just one or two cards reaps way better rewards than spreading them out across many cards. Which customer do you think a card company is going to reward more – someone who spends $1,000 consistently every month on it, or someone who randomly spends $37.40 on it once in awhile?
2. It helps you to optimize your credit score: Credit Bureau Singapore tells us that if you don’t have a good repayment history, opening more lines of credit could actually hurt your credit score. Also, your credit rep is built though building a long track record of credit history – you’re better off using just a couple of credit cards for a long period than opening a whole bunch of new ones.
3. There’s a whole lot less admin to do: The more cards you have, the more admin you have to do. Anyone who’s ever had a pile of unopened bills, statements and brochures pile up on your desk will know what I’m talking about. Keep things simple – eliminate the administrative fat, and you’ll have a way better quality of life without that annoying niggling feeling at the back of your mind that you have to clear that growing pile of paper at some point.
4. You spend less: The concept of less cards = less temptation is easy to understand, but having less cards also makes it easier for you to circumvent one of the most insidious tricks credit card companies use to squeeze money off you: the annual fee. These fees are easily waived, but you actually have to spot them in your statement and call the credit card company before they’d actually waive it. And limiting the number of statements every month helps you to quickly spot those sneaky bastards from secretly charging your card when your fee is due (almost happened to me before!).
So to recap, you now know the essential ingredients to set up a sexy, low-maintenance credit card system to build your credit rep and puts you on the path toward living a rich life:
1. Set up automatic payments
2. Use cashback/rebate cards as much as possible, and
3. Limit the number of cards you own
I’ll be blogging next about how to put all of these together – stay tuned!