How Many Credit Cards Can I Have?

There is a simple answer to this question – you can have as many credit cards as you want. However, it is not necessarily advisable to have a multitude of cards under your name at any one time. Your ability to apply for a credit card is limitless but without limits you can be doing some serious damage to your credit history and your score.

Credit Limits and Debt Ratios

One reason too many credit cards can hurt you is due to the ratios involved in your credit history. If you are seeking financing or a new line of credit, lenders will look at how much total credit you have available to you and how you use that credit. If your ratios are stacked against you and to the lender it appears you are not capable of managing your financial obligations, you can expect to be turned down flat for a new credit card or a loan.

While it doesn’t necessarily matter how many credit cards you have as it does when it comes to how you use them, temptation can be a terrible thing. If you have so many credit cards because you keep maxing out previous ones, you might be on a fast train to Debtville. Too many credit cards with too much spending likely means one day you will no longer be able to keep up with payments. Once that happens, your credit report will suffer from late or missed credit card payments.

How Many Credit Cards Are Realistic?

Again, there is no magic number but you should start with a plan. There are certain expenses you have that are regular such as gas, groceries, and even bill payments. It may be a smart move to allocate a single credit card for a single purpose. For instance, a cash back credit card can be effective for only buying groceries and earning the rewards. A gas credit card that offers rewards for paying at the pump may be ideal for your transportation needs.

You can list the regular expenses and enlist one card for each. An additional card to be used in emergency situations may also be a good idea. You may be in the range of 4-5 credit cards for normal use. Provided you can pay off each card in full on a monthly basis, you will really benefit both financially and through the credit card incentives you earn.

How To Downsize

Closing credit card accounts is not advisable because it can affect the length of your credit history and subsequently drop your credit score. You should sit down with all of your credit card statements and see which cards are most beneficial to you. Never close the oldest accounts you have if possible to save your credit score. But consider closing out recently acquired credit cards that have no purpose in your financial life.

It may also pay for you to shop around and compare the current credit card offers on the market. Since things in the credit card industry tend to change often to improve competition between providers, you may be missing out on more relevant deals that can effectively help your own finances. Once you know how you need to spend on credit, you will have a better idea of how many credit cards you should maintain at one time.