As much as we’d like to simply tell you the magic number of credit cards you should have in your wallet, it’s not that easy. Whereas four cards may be too many for one person, 14 may be just enough for another.
You’ll need to consider your individual circumstances carefully in order to determine just the right number of credit cards for you — and recognize the signs that you may have more than you can manage.
Why you may want more than one credit card
Credit cards are a great way to improve your personal credit score, which can come in handy when you need to borrow money to buy a house, a car, or take out student loans. Having multiple cards can help you build credit even faster, as it increases the amount of credit available to you. However, this only works in your favor if you don’t consistently use all of that that credit, making a point to keep your debt-to-credit ratio in a healthy range (30% or less).
Having multiple credit cards may also allow you to develop a smart spending strategy that maximizes rewards like cash back, insurance offers, and travel perks. Compare reward cards here.
Pro tip: Avoid applying for too many cards within a short period of time — that sets off a red flag for credit bureaus. Space applications at least six months apart to avoid giving the impression that you’re a credit risk.
Signs you may have too many credit cards
While more credit cards can help you build a stronger credit profile, there are some clear signs that you may have more cards than you need. Here are some problems to look out for:
- You’re forgetting payments. When you’re juggling multiple accounts, it’s easy to forget to make a payment. And even if your balance on one card is just a few bucks but you forget to pay on time, you’ll be charged a late fee — and worse, get a ding on your credit report for being late. You can avoid late fees by setting up automatic payments.
- You’re losing track of your spending. Pop quiz: How much money do you owe on all of your credit cards right now? If you have no idea, that may be a sign that you have too many cards. If you can’t keep track of your spending because it’s spread across so many accounts, it may be time to consolidate your spending onto fewer cards.
- You’re carrying high balances on multiple cards. The key to successfully carrying multiple credit cards is to look at each one as just a part of your overall debt profile. In other words, look at how much credit you have available across all of your accounts, and consider all of your debt together as well. If you’re carrying high balances on multiple cards, your credit utilization rate will be too high, your interest fees will be high, and your credit score will decrease.
- You’re losing track of your rewards programs. Many people sign up for specific cards because of the rewards programs they offer, sometimes even paying an annual fee in order to reap those rewards. However, with too many credit cards, it can be challenging to keep up with different rewards programs. It’s also tough to maximize your spending if it’s spread across too many cards.
Why you should think twice before closing credit card accounts
Perhaps you’ve realized you have too many credit cards, so you’ve decided to shut down a few accounts. But wait! Closing a credit card account can actually damage your credit score by reducing the average age of your accounts and reducing your debt-to-credit ratio — two big factors credit bureaus use to calculate your credit score.
Here’s what you should do to streamline your credit spending instead: Decide which credit cards you want to stop using. This may be due to high interest rates, unattractive rewards, or just an online payment system you don’t like. It’s really up to you. Pay off the balance, then put your credit card in a box and don’t touch it again. (For cards with an annual fee you can choose to downgrade the card, avoiding the annual fee and keeping the account open.)
Do this until you feel like you’re using only as many credit cards as you can responsibly manage.
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