Stack of credit cards
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There are those who live a totally debt-free life, but that is not the case for most Americans. A 2016 Gallup report showed that three out of four adults in the U.S. have at least one credit card. Among households that carried a balance, the average credit card debt in 2016 was $16,048.

If you have ever tried to rent a car or book a hotel room, you know how valuable a credit card can be. Still, it is possible to have too many.

Why the number of credit cards you have matters

Ninety percent of top lenders use your FICO score when making a decision regarding credit. FICO scores are based on five factors, each worth a particular percentage of your score. They are:

  • Payment history (35 percent)
  • Amount owed (30 percent)
  • New credit (10 percent)
  • Length of credit history (15 percent)
  • Credit mix (10 percent)

The number of credit cards you have could significantly impact several of these factors.

  • Payment history: The more credit cards you have, the greater the odds are that you will lose track and miss a payment, damaging your credit history.
  • Amount owed: Credit cards have the potential to hurt your credit score when you use too much of the credit available to you. What FICO looks for is how much of your credit limit you have borrowed. Essentially, creditors want to know that you can have access to credit without taking advantage of it. You should try to keep the amount of credit utilized below 30 percent.
  • New credit: It can be tempting to keep acquiring more credit cards, but each time you apply for credit, a “hard inquiry” is recorded on your credit report, and each hard inquiry brings down your score, normally three to five points.
  • Credit mix: A good mix of credit accounts includes installment loans, such as a mortgage or auto loan, plus retail accounts and credit cards. Having too many credit cards can knock this mix out of balance.

How many is too many?

There is not one correct answer to this question. How many credit cards you should have depends on your ability to manage them and your overall debt. Watch out for the following signs that you are trying to use too many credit cards at once:

  • You have lost track of the balances on each card.
  • You have a difficult time saving money.
  • You can make only the minimum payments.
  • You think about ways to make extra money to make your credit card payments.
  • You fail to pay another bill in order to cover your credit card payment.
  • You use the cards habitually.
  • You need the cards to pay for everyday living expenses, such as groceries.
  • You have maxed out one or more cards.
  • You have been late on credit card payments.

One person might be able to handle five or six cards with ease, but you might fare better with just one or two. There is nothing wrong with that. The important thing is to use those cards to build your credit.

What not to do

If do you have too many credit cards, there are a couple of things to remember: First, do not immediately close your credit card accounts. When you close a credit card account you reduce your overall available credit, and that could upset your debt-to-credit ratio, thereby hurting your credit score. Also, anytime you close an account, you could hurt the part of your score that’s tied to the length of your credit history.

Use Bankrate’s calculator to figure out what it will take to pay off your credit card debt.

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