How Many Credit Cards Is Too Many?

“PAY ON TIME, EVERY TIME”

by Contributor

Photo: stevepb at Pixabay, Free License

(Feb. 26, 2020) — A lot of people consider the receipt of their first credit card a rite of passage. It says a financial institution thinks you’re trustworthy enough to handle the responsibility. In other words, they consider you an adult. As thrilling as that first one can be, subsequent card approvals are less momentous, and you may well have a number of credit cards in your wallet before you know it.

This leads to the question: How many credit cards is too many?

What’s the Average?

According to renowned polling firm Gallup, the average American who has credit cards has an average of just under four (3.7). When lumped in with Americans who do not have cards at all, the average drops to just under three (2.6). The vast majority has between zero and two, while 16 percent of the people who live in the United States have five or more cards.

Interestingly though, people with the highest credit scores tend to have more credit cards than the average. According to the Fair Isaac Corporation, among the 50 million Americans whose credit scores top 785 — so-called “high achievers” — the average is seven cards. What’s more, among people whose scores are 800 or better the average is 10 – although this also includes bank lines of credit.

Does It Really Matter?

The number of cards you hold can be both a blessing and a curse, depending upon how you choose to employ them. As Freedom Debt Relief reviews illustrate, having a lot of cards and using them strategically can be a real benefit or they can exacerbate a cycle of debt that’s hard to escape.

It really comes down to how you manage your accounts.

For example, the polling we quoted above also shows among those who have seven accounts, only four cards carry balances from month to month — and those are quite low. This, as you might imagine, is part of why their credit scores are so high. After all, one of the key scoring factors is how much of your available credit is currently consumed. Anything over a third is typically looked upon with a bit of concern.

Other Key Factors

The average age of your card accounts also comes into play when your credit score is calculated. The older a responsibly maintained account is, the better the effect it has on your overall credit score.

In other words, having the “right” number of cards is less important than paying careful attention to the three most important scoring categories. These are your payment history (35 percent), credit utilization (30 percent) and the length of your credit history (15 percent).

Those three factors comprise 80 percent of your score.

So Again, How Many Credit Cards Is Too Many?

Frankly, there is no ideal number. Some people go through life with just one card and do fine. Others have dozens and manage those quite well too.

Which brings us to the real factor here.

You can have as many cards as issuers will give you, but the most important thing is how you use those cards and how you maintain those accounts.

  • Pay on time, every time.
  • Keep your credit utilization under 30 percent of what’s available to you.
  • Keep credit card accounts open — even when unused (assuming no annual fees are being imposed).
  • Have both installment loans (a set number of payments of the same amount) and credit cards.
  • Space credit applications about six months apart so that you don’t have several credit checks at once.

Consistently operating in this fashion will keep your credit score strong — regardless of the number of cards you have.

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