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Credit Card eZine - News and Articles about Credit Cards

Credit Card eZine - News and Articles about Credit Cards

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How Many Credit Cards is Too Many?

[April 21st, 2014]

Some people prefer to stay away from credit entirely, and some are tempted by every new rewards card that comes their way. But what’s the right number of credit cards to carry?

There is no right answer for every person. It depends on your financial style, your credit score, and whether or not you are the type of person who will take advantage of the rewards many credit cards offer.

The average consumer has 3.5 credit cards, but some people have many more than that. If you are a fan of store credit cards like GAP, Fingerhut or other cards specific to your favorite shopping haunts, it’s easy to collect a fat stack of cards. And with sign-on bonuses of frequent flyer miles and reward points, it can seem like a great idea to apply for as many cards as you can.

That isn’t always the best idea, though. Let’s take a look at the pros and cons of carrying multiple credit cards. First, the good things about having several credit card accounts:

The Pros

  • You will have a higher overall credit limit. This gives you more flexibility when you want to make a big purchase, but it also may give you a higher credit score. Your debt-to-credit ratio is the amount of credit you have available relative to the debt you carry. The more available credit you have, the better it is for your credit score.
  • You can save specific cards for specific purposes. This allows you to take full advantage of cash back offers and other rewards. If one card offers 5% cash back online during a certain month, you can use it that month and swap it for another one with a better cash back offer the next month. With so many rotating rewards credit cards on the market, there’s always some way to get 5% back on gas, movies or restaurants. Paying attention can really pay off.
  • You can categorize your cards and simplify your budget. Besides taking advantage of rewards, you can use credit cards to simplify your budgeting. If you put all your grocery shopping on one card, all gas purchases on another, your dining and entertainment on a third, and your travel on a fourth, it’s easy to keep track of how much you spend where.

The Cons

  • If your credit isn’t so good, applying for a lot of credit cards isn’t the best idea. Each time you put in an application, it results in a hard inquiry to your credit report, which can drag your score down. Instead, apply only for cards targeted to people with average credit, and keep it down to one or two cards.
  • It can be easy to get in over your head. If you’ve got a lot of credit cards and you fall on hard times, it’s tempting to use them all. Applying for more cards because you’ve maxed out your current cards is never a good idea. It’s important to have a solid financial plan and not rely on credit as a backup savings account.

With those guidelines in mind, apply for as many credit cards as you think is right for you. It all depends on you.

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