Credit Cards – How Many Is Too Many?

Have you ever stopped lately and took a look at how many different credit cards you’re currently carrying? If you’re like the average person, I’ll bet it’s too many. So how many credit cards are too many? Can it really have a negative effect on my credit report? Let’s take a quick look.

It is so easy to get a credit card these days. We are constantly being bombarded with offers in our mailbox. It almost becomes a habit to fill out the pre-approved application and send it in. The next thing we know we have yet another credit card. This is why the average American has 5-10 credit cards.

Did you know that having too many credit cards can actually hurt your credit score? This is even more so if you have a large amount of unused credit on them! So, how many credit cards should you really carry?

To be honest, there is no exact figure to go by. Rather, it is about your balances. We will get into more on that later. Credit companies will look at the number of credit cards you have in determining your credit risk. If you have a high number of cards, you can be considered a high risk, even if you’re not using the cards. Why? Because it’s possible for you to suddenly rack up a lot of debt on these credit cards and not be able to pay it back off.

Having department store credit cards can also be a negative factor in your credit score. Some experts say that every store card will automatically deduct 20 points off your score.

Most everyone only needs 2-3 credit cards at any one time. Perhaps one of them being a store credit card that you shop at all the time, and the others being Visa, MasterCard, American Express, or Discover.

Another important aspect to keep in mind is your debt ratio. You always want to strive to maintain your credit card debt ratio under 50%. If a creditor sees that your credit cards are maxed out, you will appear to be someone who can’t pay off their debts. Try to hold only a few credit cards and keep the balances low. Some experts will even tell you that if you can’t maintain a zero balance on your credit cards, then you have too many.

Having long established credit accounts are better than having newer ones. So, if you are trimming back on the number of credit cards you hold, try to hang on to the ones that you’ve had the longest.

Credit cards are nice to use in making larger purchases than using cash. You will have protection in case of a return. They also help against fraud by giving you the protection that you need. But, you need to be careful with credit cards. It is often said that having too much of anything in life can be bad for you, and having too many credit cards is the same thing. Opening up lots of new credit accounts will not help your credit rating, it will only harm it in the long run. The key point in all of this is to carry only a few credit cards and keep your balances as low as possible.