After a big spending spree you might ask yourself, Do I have too many credit cards?
Like most things, the answer isnt cut and dry.
Heres what they had to say.
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How Many Credit Cards Is Too Many?
There is no perfect number of credit cards to have in your wallet.
Your credit score wont tank once you hit a certain number.
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It really comes down to personal preference and responsibility.
What someone else might consider too many cards may work fine for you and your financial situation.
Rather than wondering how many credit cards is too many, ask yourself how well youre managing them.
(Using acredit card vs. a debit cardcan have some benefits too.)
Credit scoring formulas look at utilization in a few ways.
Your credit utilization ratio is 50%.
You should aim to keep your utilization rate under 30%.
Under 10% is ideal.
In this case a bank might only care about that 70%.
As a rule, anything over 30% is seen as a red flag by banks.
Opening too many credit card accounts at once can also hurt your credit scores.
When you apply for new credit lines, a hard inquiry is placed on your credit report.
The more cards you apply for, the more inquiries show up on your credit report.
Opening several credit accounts at once may also impact yourcredit scoreby decreasing the overall average age of your accounts.
To keep your credit scores healthy, its wise to wait three to six months between credit card applications.
Should You Cancel Credit Cards If You Have Too Many?
You might be tempted to call your card issuer and close your account.
When you close a credit card, youre wiping away a big chunk of your total credit limit.
Just be sure to follow these precautionswhenever you cancel credit cards.
In general, its best to keep the accounts open.
Which Kinds of Credit Card Accounts Should You Have?
Although store cards are often a popular choice (who doesnt want those extra deals at their favorite store?
), you want to be sure youre getting a worthwhile deal before opening one.
I usually avoid store credit cards because their interest rates tend to be high, Svensson says.
Theyre also limiting because they can only be used at that one store.
Each credit card rewards program maintains its own point structure or cash back percentage.
Are you more likely to use your card to book luxury vacations or to fill your tank with gas?
Its more about ensuring you use your credit cards responsibly.
One of the best measurements of this?
Whether or not yourepaying off the balance every month.
If youre struggling to make monthly payments, you probably have too many accounts.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
Contributor Larissa Runkle frequently writes on finance, real estate, and lifestyle topics for The Penny Hoarder.
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