How Many Credit Cards Should You Have?
You seem to have a credit card for every occasion and only start to worry when your credit cards begin taking over all the space in your wallet. You should already know that owning too many credit cards can reflect poorly upon your credit score and credit report. But at the same time, you would like to have a few cards for separate things: that Sears card for when you want to buy a new refrigerator and take advantage of that 0% APR for nine months offer, your Visa card for buying just gasoline and getting related rewards, your high-tech American Express Blue card for online purchases, and a few others tailored specifically toward what you buy and what, if anything, you want to get in rewards.
People often wonder if there is a number to avoid when it comes to number of credit cards. If you do not already understand that over 10 is too many, here is your wake up call. Consider for a moment how necessary it is to have 10 credit cards. How often do you use them? Once a year? Less? There are some people walking the streets with, believe it or not, as many as 50 credit cards. There is absolutely no reason for you to have that many credit cards and any lender who sees that on your credit record may very well fall out of his or her chair.
The average American has 5 to 10 credit cards at any given time. While there is no perfect number of cards that will make a banker smile and pat you on the back for a job well done, 5 or less is probably your best bet. Why? Because depending upon your needs, what you can get out of credit cards, and how often you truly use your credit, you can most likely get away with having 5 or less and living quite comfortably with a pleasant credit record.
Credit cards have are actually supposed to have a specific use; you purchase what you cannot afford to pay in full at that time. For example, you need a new dining set but the one you really want will cost you $1,000. That money is not currently in your checking account, and you don’t want to drip into your savings, so you use a credit card and that allows you to either pay in full later or pay in installments as your bills arrive. Now think about what you use your credit cards for. Groceries? Shopping sprees? Items you don’t need or could pay for with cash, check, or a debit card?
Slimming down your number of credit cards can have more benefits for you in terms of rewards as well. Getting multiple cards in order to try and get more rewards at once will backfire; unless you charge everything, you’ll just be waiting longer. Piling all of that into one card with rewards, however, will make you reach your reward goal faster.
Store credit cards seem to be the place people falter the most. Get 10 or 15% off your purchase today just by signing up! It sounds great, everyone loves to save, but what if you only shop at that store once every year, or even once every six months? And what good will it do you to put it on the credit card anyway? Stores often entice their cardholders to shop more by giving them special offers at special times. But what about when you want to shop at a time when there is no promotion? Having that store card is basically useless.
Owning a smaller number of cards makes your finances easier to keep track of, makes it harder to fall into debt, and are most useful to you when you actually need them.