You’re trying to be responsible about your credit. You’ve ordered your credit report and made sure that all of the information on it is accurate and up-to-date. You’ve started paying more than your minimum payment on some of your balances in order to reduce your credit card debt. And now you know that you need to start thinking about closing out some of your credit cards in order to reduce the number of accounts that you have. But how many credit cards is the right number to have? The answer to this question unfortunately varies considerably from person to person. It depends on how many credit card accounts currently have outstanding balances, what type of regular spending the individual card holder does, how many of the accounts have additional card holders on them and how organized you are in terms of tracking and managing your finances.
So there isn’t a perfect number of credit cards to have but there’s a basic range that you want to shoot for. You should have at least one credit card, for emergencies if nothing else. And you should try to have no more than five credit cards. If you’re the kind of person who is carrying twenty different credit cards; don’t worry. Aim for reducing the number that you have by fifty percent per year until you’re down to around five.
Why is anywhere from one to five the magic range for the number of credit cards that you should have? It is a number which tends to be manageable for most people. The average person can track spending on up to five credit cards, avoiding late payment and over-the-limit fees because they are basically aware of what is going on with each credit card. Five cards is also enough to give the individual some flexibility in carrying different cards without making things too overwhelming. If you have more than five cards, you risk being disorganized about your finances and overwhelmed with too many cards.
Five credit cards gives you the opportunity to have a range of different accounts for your different needs. An example of this might be the married business owner who uses an American Express rewards card for most personal expenses. She may also carry a personal Mastercard or Visa since not all places take American Express. She may have a third card for her business, a fourth card that is a shared account with her husband (used for shared expenses like home improvement) and a fifth gas rebate card for getting her money back at the gas pump. That’s five cards that meet the different needs in her life without overwhelming her with bills that come too frequently and balances that keep climbing higher.
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