July 31, 2017 in Credit Cards

Hold ’em or fold ’em? How many credit cards is too many?

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:

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

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:

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.