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article imageOp-Ed: Credit cards — How many is too many?

By Larry Alton     Apr 22, 2014 in Business
This is a question many credit card users ask themselves. The real answer to the ‘how many’ question is this: it depends.
This is a question many credit card users ask themselves. While it's advisable to use credit responsibly to boost credit score and take advantage of rewards, it's relatively easy to get in financial trouble if credit cards are mismanaged.
The real answer to the ‘how many’ question is this: it depends. While that's vague, there are a number of questions to examine, which will help you determine how many credit cards is too many for you. Consider the following:
How much can you juggle? If you're a responsible credit user, having as many credit cards as you desire isn't a problem. However, it can be difficult to keep track of interest rates and pay dates if the number gets too high. This might seem to be a plebian concern, but if you have trouble remembering when to pay, it's not advisable to have more than three cards. Things are made easier if the credit cards are through a bank, as you'll be able to make multiple payments through the same website.
What's your current debt situation? For people who are trying to get out of credit card debt, a good strategy is to pay off credit cards and close the accounts as soon as possible. It's best to start with cards that have the highest APR. For people who often struggle to use credit appropriately, a low-interest card is the best choice to rebuild good credit again. If you're good at handling debts, having multiple credit cards with reward options is often a good plan.
What's your debt-to-income ratio? Debt-to-income ratio is the comparison of how much debt you could accrue if your credit cards were maxed out compared to the amount of income you have. You can easily calculate this yourself, and if the number is higher than 37%, it may be worth closing some accounts.
What's your credit utilization? This number is about how much debt you actually have. It's calculated by dividing total debt by your total credit. A good rule of thumb is to aim for this number to be around 30%, but less than 10% is ideal. In this vein, the more credit cards you have, the more tempting it is to use them, thus upping credit utilization.
What kinds of cards do you have? It can be advantageous to have cards that are tailored to your interests. For instance, if you're a traveler, a card that doesn't charge for foreign transactions and gives benefits in the form of air miles and hotels can be a good choice. There are also cash-back cards that offer rewards based on where you shop. If a card doesn't work for you in this way, it might be a good idea to get rid of it. According to Chris Mettler, CEO of, “The rewards programs available for most credit cards today are much more significant than they were years ago, largely due to the rising competition within the industry. There’s no reason not to have a rewards-yielding credit card these days; they’re readily available and yield significant benefits.”
There are certainly benefits to having more than one card. Most consumers have between one and three cards; it's a good idea to have a low-interest card for situations where you need to borrow, and one or two rewards cards that you pay off every month to get dividends.
It’s important to note that what's right for one person might not be right for another. Individuals trying to rebuild credit scores, individuals who are new to credit, or those with low incomes should not have more than one card in order to reduce temptation to overspend. In the latter situation, it is best if the card has a low interest rate and also a low limit. Never spend more with credit than you have in the bank.
In sum, it's important to know what sort of spender you are and how you typically interface with money. "How many credit cards should I have?" can, in many ways, be likened to "How many drinks should I have?" There are some who shouldn't have any, and others who can have several and be fine. Above all else, though, it's important to know your limits and be responsible. It’s easier to maintain good credit than to rebuild it.
Do your due diligence before applying so you can rest assured you've made the right choice for your lifestyle.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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