Credit cards are fine, but fewer are better


November 12, 1995|By Susan Bondy | Susan Bondy,Creators Syndicate

After our wedding, my husband suggested that we consolidate our credit cards. He thinks that I have too many -- five at department stores, three for gasoline chains and a VISA, a MasterCard and an American Express card. What do you think?

I agree that you have too many cards, and consolidating them is an excellent idea. You would save money on annual fees and cut down on bookkeeping and bill-paying hassles.

But I also recommend that you hold on to at least one credit card (in your case, either MasterCard or VISA) and one charge card (for example, American Express) and keep them in your own name, for these reasons:

* Preserving your own credit history: Keeping cards in your own name helps ensure that the credit-bureau files will reflect a continuous credit history for you. This will be important in the event of a divorce or the death of your spouse.

* Travel: If husband and wife travel together, they should each have a different credit-card account. That way, if one loses a card, the other can continue to use the remaining account.

You need a credit card because some places do not take charge cards. But a charge card is handy when traveling, since there is no limit on what you can charge.

With a credit card, you can easily reach the maximum credit allowance by charging airplane tickets, renting a car or checking into a hotel. Many hotels and car rental companies put a large "lien" -- which freezes a portion of your credit -- on your credit card as soon as you register.

Today, most large department stores accept the major credit cards. So, why pay all those annual fees and monthly bills? The only reasons to keep a department store card are if the store gives users of its card a discount or the terms are more attractive than those on your other credit card.

For readers who are not familiar with the difference between charge cards and credit cards, here's a brief synopsis:

Credit cards are "buy-now, pay-later" cards, like MasterCard, VISA and the Discover card. All credit cards have predetermined spending limits and charge interest on unpaid balances.

Some credit cards carry an annual fee (from $10 to $50 a year) while others are free. Each issuer may set its own fees. A MasterCard can cost you $10 at one bank and $35 at the next.

Charge cards are "pay-as-you-go" cards, such as American Express and Carte Blanche. Because they have no spending limit, they are preferred for business and travel. The total amount is due upon receipt of the monthly bill.

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