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How Many Credit Cards Are Too Many?

Using credit cards have added a level of convenience that many fail to appreciate.  Would you rather have to carry $300.00 in cash to purchase that new lawnmower or just carry a small plastic card in your wallet?  Now we don’t even have to carry the plastic and can pay with through an IPhone.  One downside to this convenience is the likelihood of getting into too much debt.  Getting too many credit cards can become an invisible way of getting into debt.  Whereas when people needed to pay cash, they paid from what was in their bank account or had to go through the conscious trouble of applying for a loan.

multiple credit cardsIf Experian data is correct, the average American had almost four credit cards during the thirds quarter of 2020.  This was an improvement or a reduction on the number of credit cards consumers held in 2019.  So then what is the appropriate number of credit cards one should have? You’ll have to decide based on your finances and credit objectives, but, here are some pros and cons.

Being able to use more than one credit card makes it easier to split expenses amongst them.  This reduces the percentage of the available balance you is being used on any single credit cards.  This lower credit utilization when kept low may help your credit score.  For instance, say you have a major purchase, like a $300.00 lawnmower, in addition to your regular expenses.  If you had one credit card, the $300.00 for the lawnmower would increase the percentage of the available credit limit that is being used.  This may affect in a negative way the credit score.  But, with two credit cards, one may be used for regular expenses and the other to purchase the lawnmower. 

With multiple credit cards you can also maximize the rewards that the credit companies offer.  If one credit card gives three percent cashback rewards on supermarket purchases only and another gives two percent on gasoline, then you can split how you use them. 

Some credit cards also send offers you can take advantage of.  Back to the $300.00 lawnmower, you can search for a credit card that offers several month same as cash repayments instead of using the regular credit card used for all other expenses.  As long as the lawnmower is paid in full before the same as case payment period expires, you will save money by not paying interest.

But what could go wrong with having multiple credit cards? 

Lack of discipline can lead to having too many credit cards and too much debt.  If you have a history of overspending, it may benefit you better to just have one credit card that can keep an eye on.  Some credit cards make it too easy to open accounts.  Self control is vital.

Having too many credit cards can also make it difficult to remember when payments are due.  Next thing you’ll see late fees being added to the bill.  If you are not an organized person, for the sake of not getting stuck with late fees, stick to one credit card.

Also, remember that when a credit card company opens an account it may run a hard credit on you.  This will have a negative effect on your credit score.  So to keep your credit score on the high side, it is best to keep the number of credit cards you have to a minimum.

As mentioned, there is not written in stone way of telling how many credit cards you should have.  But, do take into consideration the points mentioned.  Hopefully it will keep the financial pain at a minimum. 

Some of the points on this blog were derived from a blog by Ben Luthi at Experian’s website, https://www.experian.com/blogs/ask-experian/how-many-credit-cards-should-i-have/.

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