Credit Cards

How Many Credit Cards Should You Carry

One of the frequently asked questions about credit cards is “What is the ideal number of credit cards I can have?” Well, there is no such magic number, to be frank. It all depends on how credit worthy you are, without axing away your credit rating, only because you have too many credit cards to pay for. The ideal number is a very individual thing. Factors such as your monthly income, the amount of credit available to you, and your history of past credit go a long way in deciding how many credit cards you should have.

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However, financial experts, in most cases, are of the opinion that the right number of credit cards one should have is between 2 and 6. And among those cards, one should have at least one major card, i.e. MasterCard, Visa or Amex, because these cards are accepted in almost every outlet and establishments. Additionally, one can own a gas credit card and a store credit card if needed. But keep in mind that the interest rate to the latter card is quite high. More important than how many cards you’re carrying, though, is how much you owe on them.

Yet another factor that goes into consideration when applying for an additional credit card is your debt/credit ratio. The credit bureaus compare how much credit you have available to you in relation to how much you’re currently using. For example, if you have a credit card with a $2000 credit limit, and if you spend as much as $1000 from your credit card, the lenders are likely to balk at your credit/debit ratio. 50% credit usage is unacceptably high to most lenders. Having a credit-debit ratio of 25-30% of your card limit is what is considered as ideal.

Also, there are other factors that limit the number of credit cards you can carry. If you have a single credit card, it will be quite easy for you to track your expenses and your account due dates. Have two credit cards and you are still all right. But what happens when you have as many as 15 credit cards to handle? Obviously there will a lot of missing due dates, and this is definitely going to have an adverse effect on your credit rating as well as having your monthly charges kicked up. Is this the situation you want to be in?

Ernestina Chacko is a writer and a photographer. Before joining, she was a senior contributor at Bloomberg USA.