How Many Cards is Too Many?
For some people, collecting credit cards has become a hobby much like collecting stamps or baseball cards. They successfully manage their finances and don’t fall prey to the traps of having all of that wonderful credit just hanging around waiting to be used. But can you have too many credit cards, even if you manage them properly? The answer is yes, so let’s take a look at how you can downsize your credit card collection to something manageable.
The first thing you need to know is that canceling a bunch of your cards en masse is not a good idea for your credit report. If you have otherwise excellent credit, canceling one or two of your cards if you have 6 or 7 cards total won’t be too big of a deal, but you don’t want to go from 8 cards to 2 in one afternoon. Here is how you pick out the ones to keep and the ones to bid adieu.
Take all of your statements and lay them out side by side. Compare and contrast the interest rates, the annual fees (if applicable) and any other fees that the card might have and see which ones are the best deals. You should also take into consideration things like rewards, credit limits and which cards have the best and most reliable customer service to deal with. Once you have narrowed it down, you can consider canceling out a few of your cards, bit by bit. You should always have more than one card in case of emergency, but most people have no real need for more than three credit cards at any given time.
If you are having a hard time parting with one of your dear credit friends, an easy choice to make is to cancel out any store credit cards. While it is impossible to make completely accurate broad generalizations, in most cases, store credit cards come with higher interest rates than your average Visa or MasterCard, lower credit limits and, of course, there is the knowledge that you can only use it in one place. Some store cards, like Sears, have fought back against this perception by allowing partner retailers to start accepting their cards, but even with 100 partners, you’ll be better off with a Visa, MasterCard or American Express.
Another place you can cut some cards down are with gas cards. The only people who really need gas cards are small business owners or independent contractors who use their gas card as part of work. If you are a trucker and you need accurate records of fuel consumption, then a gas card is the way to go. The same goes for taxi drivers or if you are a fleet manager. For the average joe, unless you use an absurd amount of fuel to earn the rewards many gas cards offer, cut them loose.
The final tip is to use common sense. If you have three cards hidden in a dresser drawer somewhere that you are saving in case of emergency, cancel two and use the third. If you don’t feel you have a large enough credit limit on your emergency card, call the card company and ask for a credit limit raise. A good strategy is to call all three, see which one will give you the biggest raise and then cancel out the two that give you the worst deal.