How many credit cards are too many?

After spending a fortune, you may be asking yourself, “Do I have too many credit cards?”

Like most things, the answer is not set in stone. While having multiple credit cards isn’t necessarily a bad thing, there are too many, especially depending on how you use them and which ones you own.

We spoke with several financial experts to find out how many credit cards you should keep in your wallet, which ones, and how to manage them for best results. Here’s what they had to say.

How many credit cards are too many?

Ever heard the phrase “too many good things”? The same goes for the number of credit cards in the wallet.

Brian Dechesare, Founder and CEO break into wall street Explains: “According to a survey, in 2020, the average number of credit cards per adult in the United States was three. Experian Report. While having multiple credit cards is not inherently a bad thing, it’s certainly possible to have too many – it all depends on your ability to manage your credit. “

While some people may be able to easily pay on multiple credit cards (while also making good use of these cashback and rewards deals), others may Strive to meet their minimum payment requirements.

Founder and CEO Nate Tsang Wall Street Zen Saying that most banks want people to have three to five credit cards. “At this amount, you can use your expenses wisely through perks and bonus points without forgetting what you spend,” he explained.

Rather than wondering how many credit cards are too many, ask yourself how well you manage them.

“If you’re having trouble paying off a line of credit comfortably, twice is definitely too much for you,” Dechesare said. “Generally, anything over 4 is probably overkill, and anything over 6 is probably too much, even for the most disciplined and organized consumer.”

The most important thing is not how many credit cards you have. More importantly, make sure you use your credit card responsibly. One of the best measurements for this?whether you are Pay off the balance each month.

Risks of having too many credit cards

The biggest piece of advice we hear from experts: No matter how many cards you have, paid off in full (every month) should be the top priority.

“The most important thing is that you don’t overextend yourself by taking on too much debt,” said co-founder Jonathan Svensson. Alves“You should make sure you always pay your bills on time and keep your credit utilization low so you can maintain a good credit score.”

Also known as your credit utilization ratio, your credit utilization is the available credit limit you have used. Excessive credit utilization can negatively impact credit scores.

“It’s more about utilization than number of cards,” said Freddie Huynh, vice president of data optimization Free Financial Network. “Utilization is how much of your available balance you use. Credit score calculations look at utilization in a number of ways. Overall credit card utilization, which is the sum of all credit card balances divided by the sum of all credit limits, is the most common.”

But Huynh warns there’s another way banks and credit bureaus can calculate your usage — and that’s by looking at the maximum credit usage on your personal card. Let’s say you always use 40% of your available credit cards on one card and 70% on the other. In this case, the bank may only care about that 70%. Generally, anything over 30% is considered a red flag by the bank.

“If you use less than 10% per card and pay your bills on time each month, you can improve your credit score,” said CEO and founder Anthony Martin choose reciprocity“But if you go over 30%, your credit utilization is too high — and if you mix it up with missed payments, it can seriously hurt your score.”

What type of credit card account should you have?

Now that you have an idea of ​​how to maintain your credit card collection, let’s talk about the types of accounts and credit card issuers you have in your portfolio.

While store cards are often a popular option (who doesn’t want to get an extra perk at their favorite store?), you need to make sure you’re getting a good deal before it opens.

“I generally avoid store credit cards because they tend to have high interest rates,” Swenson said. “They are also restricted because they can only be used in one store.”

Other things you need to check before choosing a new card include annual fees, surrounding rules Rewards and Cash Back, and any additional benefits. There are plenty of great rewards cards out there that can help you earn cash or points on certain purchases (like gas) or more general purchases. As for those extra “perks” associated with store cards: keep in mind that many people actually use them without a card.

When deciding which cards deserve a place in your wallet, it can be helpful to start by looking at your spending. Are you more likely to use your card to shop at a particular store or refuel your gas tank? If it’s gas, the store card may not be for you.

Choose your card based on your spending habits and you’re sure to get the best rewards in your wallet.

If you feel you have too many credit cards and want to sift through them, you can apply the same rule of thumb.Please follow these precautions whenever you cancel your credit card.

The Bottom Line on Credit Card Accounts: Choose Wisely

To get the most out of your credit card, you need to take the time to pick carefully best rewards card And make a plan to use them wisely.

When in doubt, start with one or two credit card accounts until you get the hang of paying and using those rewards. You’ll then be able to iterate on your spending plan and find the perfect credit card balance for your lifestyle.

Contributor Larissa Runkle writes frequently for The Penny Hoarder on finance, real estate and lifestyle topics.