The average American has more than one bank-issued credit card, and that number is on the rise. According to June 2015 data from Experian, consumers each held an average of 2.09 cards in 2013, 2.18 cards in 2014, and 2.24 cards in 2015. So, how many credit cards is just the right amount?
How Many Credit Cards is Right?
The answer to the question of how many credit cards is the right amount solely depends on personal preference and need of an individual. There is no magic number as to what may be too high or too low. Also, there are pros and cons to having far too many or too few credit cards in your wallet.
Pros & Cons of Having Too Many Credit Cards
- Some situations make more sense than others to open multiple credit cards. Having multiple cards also means more rewards. Cashback deals on credit cards, reward dollars, discounts & other members-only perks are only to name some.
- Multiple cards allows you to segregate your expenses. For instance, you may use the higher credit limit card for larger purchases such as travel, while grocery and gas will be paid with the card that has better cash back deals on everyday purchases.
- Multiple credit lines used responsibly also sends a positive sign to the creditors. If you are on the lookout for a mortgage or purchasing a vehicle, this may come in handy.
- Yet another risk of having too many credit cards is your vulnerability to a data breach. This is because your personal information, including your Social Security Number, is available at multiple vendors. Unless you are a disciplined spender multiple cards can mean a lot of unnecessary spending possibilities. It creates a false sense of security and a crutch in tougher financial times that can derail your finances.
How Many Credit Cards is Right? Things to Remember
How you utilize your credit is what matters in the end. If you maintain a healthy credit utilization ratio, the message sent to your creditors is that you are responsible when it comes to finances.
The next thing to keep in mind is if you are able to pay off the balances if faced with a crisis. Losing your job or running into a sudden financial emergency can quickly soak up savings. If that happens, would you be able to make monthly payments on time? How well will you be managing credit card debt in such a scenario?
Finally, it makes little sense to open new accounts if the card will just sit in a drawer or at the back of your wallet. This is especially true if the card has an annual fee.
If you are seeking credit card debt advice, speak with a certified counselor at American Consumer Credit Counseling by calling 800-769-3571 today.