How Many Credit Cards Should You Have?

You didn’t notice, until you did. Your stack of credit cards has grown into, well, a heap of tempting offers and promotions. Store chain cards. Major credit cards. Cards for brick-and-mortar retailers as well as online sellers. There’s a plethora of plastic out there, but how many credit cards should you have in order to keep your credit score in the ‘good’ or ‘excellent’ range? Can having too many cards — or too few, believe it or not — negatively impact your credit score?

Your Credit Cards Can Affect Your Credit Score

If you’re looking to build your credit history, opening a credit card is one of the quickest and easiest ways to establish a solid history. Start off with a low credit limit, which will be easier to manage. Paying off the credit balance each month establishes a solid credit history and at the same time will keep your overall credit score high. Late or missed payments can negatively affect your score and impact everything from your ability to get additional cards to securing the best rate on a loan.

Be More Knowledgeable About Having More Cards

If you have two or three credit cards, each with high limits and low balances, your credit score will be higher. How so? Creditors and lenders will see that you aren’t maxing out your cards and using all of your available credit, which means you’re utilizing your debt better.

Having multiple cards might also mean you’re eligible for a points rewards program. If you tend to use credit cards for many, if not most, of your transactions and you pay the balances off each month, you’ll find that credit points can accrue quickly. Some rewards programs and points can be saved up and applied to costly items such as trips, hotel stays, and airline tickets. But it’s easy to forget that accruing points comes at a cost:  It can be easy to overspend and balances can grow to a level you might find difficult to pay off monthly. In your eagerness to snag more and more points, you don’t want to be penny wise and pound foolish.

Less Is More When It Comes To Credit Cards

It’s a simple equation:  The more cards you have with high balances or if you have several maxed out cards, your credit score will be lower. Should you decide to eliminate some of the cards you have, do so over time. Closing too many cards simultaneously can raise a red flag and negatively affect your credit score. Another option is to leave a few cards open but not use them, which will help you maintain a low credit card utilization ratio.

When You Have The Right Information, You Hold All The Cards

You can download a free copy of your credit report each year, complements of the Federal Trade Commission. The report will allow you to see your credit score and the total number of cards you have open, information that could help you determine if you want to close certain cards.