How Many Credit Cards is Too Many?
Once you have gone down the path of credit worthiness and gotten a credit card, you will be amazed at the number of credit card offers you will get in the mail. The sheer volume of offers can be both flattering and overwhelming. They can also be dangerous to your future credit and economic stability.
Having more than one credit card can help you learn some important lessons in life and finances. On the other hand it can also provide serious temptations that can lead to very real credit problems very quickly. You can use more than one card in order to maximize rewards and earn extra perks, to learn better and more efficient methods for budgeting each month, and to either build or rebuild your credit history.
The trouble for most lies in determining how many credit cards is too many.
For most people 2 or 3 credit cards is the ideal number. Of course, there are no hard and fast rules when it comes to this and there are always mitigating factors. But signing up for a new credit card in order to get a free toaster can lead to trouble.
Your goal is to build a strong history of good credit and positive spending habits. You need to be able to manage each account you have open when it comes to credit cards, as well as keep a good mental balance of what you’ve spend and how much is available on each card at all times. You also need to be able to be absolutely certain that you can make your payment on time each and every month for every card you have. If you can’t do that for two cards, then three would be too many.
Having one credit card that is dedicated exclusively for Internet purchases is also a good idea. You’ll want to watch this account very closely for any unauthorized purchases and make sure that it is heavily guarded against identity theft and fraudulent purchases. Having all Internet purchases on one card and one card alone can save you a great deal of time and hassle if the need ever arises to track your spending history with that particular card. The added benefit of this is that if there is a need to cancel the card as a result it will not cripple your credit or your spending abilities.
You should also consider how the number of credit cards you have affects your credit report. The more accounts, the higher the risk. It is much better to have a few accounts that display a long and loyal history of on time payment and increasing credit worthiness than it is to have 10 credit card accounts that have been opened in the past year and have very low balances. In fact, those 10 accounts are a recipe for disaster and most savvy creditors are well aware of the risks.
Another thing you want to be careful not to do is to close old accounts frequently in favor of opening new accounts. You want an established credit history and 10 years with the same card shows potential creditors and lenders that you have been a good and loyal customer, which indicates that you will also be a good and loyal customer with them as well.
Find a couple of credit cards that will take care of most of your purchasing needs and perhaps one additional credit card that is dedicated to online shopping. Otherwise use the cash you have on hand and keep your balances reasonable on all of your credit cards in case an emergency arises and you need those cards to do their jobs.
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