main of How Many Credit Cards is Too Many To Have?

How Many Credit Cards is Too Many To Have?

Credit cares are incredibly convenient little devices. They allow you to use your accumulated credit on purchases so that you don’t need to carry around cash or other forms of currency with you all over the palace. Credit cards make shopping online a breeze and you often get rewards points for them. So what’s the issue? Credit cards can actually damage a person’s finances. It’s very easy to spend when you’re just tapping or swiping a card. This can be especially true when you aren’t seeing your statement until the end of the month. It can become too easy to overspend. What’s more, people may use multiple credit cards, accumulating huge amounts of debt and then being unable to pay said debt off. What gets worse is once someone starts using one card to pay off another. That leads to a debt spiral that few people can pull out of. 

Answer: Every situation is different, but more than 3 credit cards is often a red flag. 

Credit cards and credit utilization play an important role in your overall credit score. This is one of the reasons that people get them. Credit utilization plays a 30% factor in a credit score. The more credit that a person has available, the better it is for them. This is part of the reason why multiple credit cards are beneficial. The temptation to use too many and over-extend is made more easily possible with multiple cards though. 

Even if you have several cards with no balance, this can be damaging as well. The issue with zero balance is that if you keep that up, the card will end up getting shut down due to inactivity. In turn, it’s time to reapply for a card. The average age of credit accounts is also very important. If your long term zero balance cards get cancelled, then you’re out of luck and have to take a hit. 

From a financial perspective, there’s rarely a reason to need multiple different credit cards. In many cases it’s as simple as having a card for personal purposes and perhaps a card for business. Another option is to have one for online purchases, and one for in store. This can help in case there’s ever a stolen credit card. It’s easier to determine false purchases when you have that kind of obvious split in your usage. 

Additional Resources

Finance is one of the most popular topics online and credit cards certainly have a lot of information floating about. These resources will provide more information on this topic and hopefully help educate anyone reading them. 

  1. Experian - Experian is one of the big credit bureaus and provides a lot of info on the various aspects of a credit score. This article focuses on credit cards and how they can numerically affect a credit rating. 
  2. Creditcards.com - This website is full of information on almost every issuer and credit card available to people, from APR to points. This article focuses on the number of credit cards people get and signs they have gone too far. 
  3. Forbes - Forbes is one of the first names on the lips of people looking for business and financial advice. This article focuses on some of the best personal credit cards, rated according to Forbes’ criteria. 

Questions to Consider