How Many Credit Cards Should You Have?

A close-up of a hand holding five credit cards from different credit card issurers

Thanks to modern approval processes, applying for new credit cards from a card issuer such as a credit card company, a bank, or even a department store is as easy as answering a few questions.

With the number of discounts offered at many major retailers, applying for a new credit card at your favorite store can be tempting, but how many are too many credit cards?

Assess Your Financial Goals and Credit Needs

If you’re asking yourself this question, it could mean that you are too easily tempted by new credit card offers. Before signing up for more credit cards, there are some factors you should consider. One, how is applying for this credit line affecting my credit score? Two, how much credit card debt will I be in?

How Many Credit Cards Do You Have?

Your priority is to get to a zero balance each month on all of your credit card accounts for a low credit utilization ratio. However, if that is not possible and you have multiple credit card balances, you can start with store credit cards, since it’s likely they carry higher interest rates than other financial products. That means paying them off first will save you more money in total interest charges. Store cards typically have lower credit limits than your bank credit cards, so it should be easier to pay off the lower-balance accounts.

Prioritizing Credit Card Balances and Payments

To get them paid off timely, create a budget and a payoff plan. It takes time and commitment to get two credit cards or multiple revolving credit accounts paid off completely. The first step is to stop using the cards and stop borrowing. Don’t use your cards for purchases until your credit card debt is all paid off with zero credit card balances. You can also call or chat with us online to talk to a free financial counseling session about budgeting and debt repayment options for revolving credit accounts.

What is a Store Card?

Store cards are credit cards offered by department stores. Unlike credit cards, which allow you to spend almost anywhere (such as Visa, MasterCard, and American Express), a store card will only allow you to shop at select retail locations – typically locations under the brand’s name.

Just like regular credit cards, store cards have credit limits and require that you make monthly credit card payments. These cards are easy to apply for and have a 7-day cancellation policy. Plus, they will typically partner with major credit card issuers to guarantee reliability. The best credit card from a department store offers rewards, exclusive discounts, deals, and benefits. These credit cards offer might come in the mail pretty often, but if you already have too many store cards, you have the option to opt out of prescreened credit card offers. 

Of course, store cards do have some drawbacks. These types of cards typically have a higher Annual Percentage Rate (APR), may not be usable everywhere, low credit limits, and are usually obtained through retail associates who are not trained financial experts.

What to Do if You Have Too Many Credit Cards?

Having too many cards can lead to several drawbacks, including:

  • Large amounts of credit card debt
  • Multiple monthly payments
  • Dings on your credit report

However, that doesn’t mean that credit cards are bad. Having open credit lines can be valuable if you’re looking to improve your credit score.

The best way to determine if you have too many credit cards is if you’re struggling to make payments or are looking for a new credit line to cover the current debts from revolving credit you owe. If you find yourself in this situation, there are several steps you can take to get back control over your individual account.

Stop Excessively Using Your Cards Available Credit Limits

The very first step is to cut back on using your credit as much as you can. If you already have a large debt amount, adding to the debt will take you in the opposite direction and increase your credit card balances.

If you have your cards linked to any automatic bill payments like streaming services, now is the time to switch them to regular debit cards or to start paying for things in cash.

Another helpful tip is to not carry your cards with you every day. Leaving them at home can lower the temptation to make unintended small purchases. It may also minimize the risk of losing them or having your information stolen from identity thieves.

Pay Off Credit Card Debt

Next, start paying the credit card debt down. Organize your debts from those with the highest interest (usually store cards) to those with the lowest interest. Focus on paying off the accounts with higher interest first. 

If possible, aim to pay your credit card balances off in full. Every time you use any credit card, you should have a plan to have it paid off right away. This is the best way to get out of debt quickly and avoid debt altogether.

Don’t Close Your Credit Card Accounts

Once you’ve paid off your debts to a low credit utilization ratio balance, your first instinct may be to close your accounts. However, keeping your credit lines open can help improve your credit score thanks to two factors – your credit history and your credit utilization ratio.

Credit history

Your credit history is a record of how well you handle debts. This is determined by:

  • How many credit accounts you have
  • How long they have been active
  • How much you owe
  • Payment punctuality
  • Recent inquiries

Having an active credit history is one of the many factors that affect your credit score. In fact, it makes up about 15% of your credit determining factors.

Closing a credit account will take away your credit history. This could lead to a negative impact on your credit score.

Credit utilization ratio

A credit utilization ratio is the percentage of your available credit that is in use. This is calculated by dividing the amount of credit card debt you owe by the amount of your available credit limit.

For example, if you have a total credit limit of $10,000 and currently owe $1,000, then your credit utilization rate would be 10%.

The ideal credit utilization rate is 10% or below. You should also note that your credit utilization rate makes up approximately 30% of your credit score.

It’s important to keep multiple lines of credit open. Try to use them at least twice a year to show that you have an active credit history and use the card responsibly to handle debt.

Don’t Sign Up For A New Credit Card

While having “too many” store cards isn’t necessarily a problem, you should still be cautious of signing up for more now that you’re informed of their drawbacks. Every credit card application requires a “hard” inquiry into your credit report. These inquiry types can affect your credit score for up to six months.

Also, every credit card account that gets approved is another account that you have to manage. Keep the hassle and temptation away by declining any new offers of credit offers from retail stores or pre-approved offers.

Stay in Control of Your Credit

If you have too many monthly payments, you may benefit from signing up for a Debt Management Plan. A debt management program can help you get:

  • A single monthly payment
  • Lower interest rates and fees
  • Faster debt repayment

Remember, we’re here to help if you have any questions about your credit or debt history. Our credit counselors can help you set up a budget and review the options available to help you pay down your excessive debt. 

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.

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