How Many Credit Cards Is Too Many?

Any organization that promises to tell you the right number of credit cards to have is not being forthcoming. There is no magic number of credit cards that credit bureaus look for in order to determine if you have too many. Instead, the answer is more complicated than that. On the one hand, that is great for people who love the perks and benefits they can get from store credit cards. On the other hand, it can make it difficult to determine how many credit cards is too many for your individual credit score.

While there may not be a magic number of credit cards that is too many, it is certainly possible to have too few credit cards. You want your credit to show a variety of different types of credit, so having one or two cards that you regularly pay off can be an easy way to boost your credit score.

Credit Utilization Rate

Remember, it is not the number of credit cards you have that impacts your credit score, but your credit utilization rate does. You want to keep your credit utilization rate below 30%, which is easier if you responsibly manage multiple credit accounts. In addition, credit applications that involve hard inquiries reduce your credit score for a short period of time. A single inquiry is not likely to have a major impact, but opening a number of credit card accounts in a short period of time can lower your credit score.

How Many Credit Cards Should I Have?

That said, the average number of open credit cards that people with exceptional credit have is three. If you have more open credit cards than that and you are concerned about the temptation to use them and thereby reduce your credit score, you may want to consider closing some of your open accounts. However, you have to keep in mind that closing accounts if they have a balance on them when you close them also counts as activity on your credit report, so make sure you pay off balances before closing any cards.

If you do choose to cancel any of your credit cards, pick those with low limits, that you have had the shortest period of time, and that have any annual fees or interest rates. Keep the cards you have had the longest and that offer you the best benefits and the highest limits; they are not only beneficial to your credit score, but are also a good representation of the type of smart credit decisions you should be making.