How many credit cards is too many?
The number is up to you and should take into account your own financial situation. According to Equifax, two or three can be a good number.2 Just remember, the more cards you have, the more information you need to keep track of, including monthly payments, interest rates, and total utilization.
It also depends on how responsible you think you are when it comes to your spending habits. For some people, the more credit cards you own, the greater the temptation to go on a spending spree. You should aim to never spend more than you think you can pay off in full each month. If you keep spending more thank you can pay of, you will accrue interest and acquire even more debt, hurting your credit score in the long term.
It’s also important to keep in mind that interest rates can be high for some credit cards, especially store cards, and you may incur additional charges if you’re late on payments. While you may not necessarily hurt your credit score as long as you make the minimum payments and keep your utilization under 30%, it can be easy to get carried away when juggling multiple cards.
How can credit cards help your financial goals?
When used wisely, multiple credit cards can help you achieve your savings goals. If you’re trying to build good credit, staying below that recommended 30% utilization is an easy way to boost your score. Having multiple cards makes it easier to spread out that 30% across your cards, giving you more funds to utilize if you need them.
You could also look for cards that offer rewards, such as cash back or airline miles. With everyday use, you can quickly accrue enough rewards to take that vacation you’ve been saving for or start on building some emergency savings. Some cards can also provide you the opportunity to pay off a large purchase over time with no interest (provided you pay the balance off with in the specified period).
Whatever your financial goals, credit cards can be a useful tool. Just remember to review all the terms and conditions and keep your spending in check. With a little discipline, you’re well on your way to success!