Wednesday 19th of December 2018

How Much is Too Much: The Credit Card Edition

Is your wallet loaded up with credit cards? These are an essential part of most people’s financial lives and it’s completely normal to have 5-10 different varieties. However, it’s when consumers accumulate twenty or thirty credit cards that they start to run into problems. Having that many is not only nearly impossible to keep track of, it can also cause significant damage to your score. While there is no golden rule as to how many you should have at once, there are some guidelines you can follow to ensure you don’t end up overwhelmed.

The Rules You Should Know

  • You shouldn’t try to get by without any credit cards at all, instead simply keep a reasonable amount of accounts open, experts agree that around 2-6 is a good number. Also, make sure they are with the major merchants, such as Visa, Discover, Mastercard, or American Express.
  • No matter how many different varieties you have, one rule you should always try to follow is keeping your balances under 50% of your limit. In other words, don’t put more than $500 on a card with a $1,000 limit. Having maxed out cards tells creditors that you can’t pay off debt and use too much credit.
  • If you do happen to have way too many, one thing you probably shouldn’t do is try closing every single one of them at once. It will cause your debt-to-credit ratio to plummet, which is an important factor in determining your score.
  • So how do people end up with 30+ credit cards? For many people, store specific varieties are to blame. They get lured into opening one for the one-time discount or coupon offers, but end up getting trapped into their debt cycles. Your best bet is to keep just one or two of these products for stores you’re particularly fond of.
  • One thing that almost all financial experts agree upon is the importance of making your payments on time. Failing to do so will not only lower your rating, but you’ll probably incur a fee and see your interest rates increase. Not making your payments on time will put anyone in financial trouble, regardless of the amount of cards they have.