How Many Credit Cards Should You Have?

How Many Credit Cards Should You Have?  Your Credit Score Could Be At Risk

Credit card offers promising extremely low rates and numerous rewards make it very tempting to apply for and receive many different credit cards.  The average American carries five to ten credit cards in their wallet, while others may have up to fifty.  There is no magic formula for determining how many credit cards you should have, but a good rule of thumb is to have no more than you can reasonably pay off in a short period of time.  The more credit cards you have, the more risk you have of damaging your credit due to high balances and a large debt to income ratio.

Many people make the mistake of opening credit accounts at their favorite store.  The fact is that each time you open a store credit card, your credit score can drop by as much as 20 points.  The advantage of opening a store credit account is that they are typically easier to obtain than a bank credit card.   Whether your favorite store is a clothing store, electronics, or perhaps a credit card from a gasoline company, you should open as few store credit accounts as possible.  Not only do you put yourself at risk of accumulating more debt that you can afford to repay, but also your credit score will drop with each new account you open.

You should only apply for credit cards from major issuers because the majority of merchants accept them worldwide.  Two to six credit cards is more than enough for the average consumer.   Also, make sure the credit cards you carry come with rewards such as cash back or airline miles.  Your credit score is too important to risk due to carrying large numbers of credit cards.