How Many Credit Cards Should I Have?

Thanks to the modern approval processes, applying for a new credit card from a credit card company, a bank or even a department store is as easy as answering a few questions.

With the number of discounts offered at many major retailers, applying for a credit card at your favorite store can be tempting. But how many is too many credit cards?

If you’re asking yourself this question, it could mean that you are too easily tempted by good credit card offers. Before signing up for more credit, there are a number of factors you should consider. One, how is applying for this line of credit affecting my credit history? And two, how much debt will I be in?

How Many Credit Cards Can You Have?

Your first priority is to get to a zero balance each month on all of your credit card accounts. However, if that is not possible and you have multiple credit card balances, you can start with the store cards, since it’s likely they carry higher interest rates than other cards. That means paying them off first will save you more money in total interest charges. Store cards typically have lower balance limits than your bank credit card(s), so it should be easier to pay off the lower-balance accounts.

To get them paid off timely, create a budget and a payoff plan. It takes time and commitment to get multiple credit card accounts paid off completely. The first step is to stop using the cards and stop borrowing. Don’t use your credit cards for purchases until they are all paid off.  You can also call or chat with us online to talk to a free financial coach about budgeting and debt repayment options.

What is a Store Card?

Store cards are credit cards offered by department stores. Unlike credit cards, which allow you to spend almost anywhere (such as Visa, MasterCard, and American Express), a store card will only allow you to shop at select retail locations – typically locations under the brand’s name.

Just like regular credit cards, store cards have a credit limit and require that you make monthly payments. These cards are easy to apply for and have a 7-day cancellation policy. Plus, they will typically partner with the major credit card companies to ensure reliability. The best department store credit cards offer exclusive discounts, deals, and benefits. These credit card offer might come in the mail pretty frequently, but if you already have too many store cards, you have the option to opt out of prescreened credit card offers

Of course, store cards do have some drawbacks. These types of cards typically have a higher Annual Percentage Rate (APR), may not be usable everywhere, and are usually obtained through retail associates who are not trained financial experts.

What to Do if You Have Too Many Credit Cards

Having too many cards can lead to several drawbacks, including:

  • Large amounts of debt
  • Multiple monthly payments
  • Dings on your credit history

However, that doesn’t mean that credit cards are bad. Having open credit lines can be valuable if you’re looking to improve your credit score.

The best way to determine if you have too many credit cards is if you’re struggling to make payments or are looking for new lines of credit to cover the current debts you owe. If you find yourself in this situation, there are several steps you can take to take back control over your credit.

Stop Excessively Using Your Cards

The very first step is to cut back on using your credit as much as you can. If you already have a large debt amount, adding to the debt will take you in the opposite direction.

If you have your cards linked to any automatic bill payments, now is the time to switch them to regular debit cards or to start paying for things in cash.

Another helpful tip is to not carry your cards with you every day. Leaving them at home can lower the temptation to make unintended small purchases. It may also minimize the risk of losing them or having your information stolen from identity thieves.

Pay Off Credit Card Debt

Next, start paying the debts down. Organize your debts from those with the highest interest (usually store cards) to those with lowest. Focus on paying off the accounts with higher interest first.  

If possible, aim to pay your balances off in full. Every time you use any credit card, you should have a plan to have it paid off right away. This is the best way to get out of debt quickly and avoid debt altogether.

If you have too many monthly payments, you may benefit from signing up for a Debt Management Plan. A debt management program can help you get:

  • A single monthly payment
  • Lower interest rates and fees
  • Faster debt repayment

Don’t Close Your Credit Card Accounts

Once you’ve paid your debts down to a reasonable balance, your first instinct may be to close your accounts. However, keeping your lines of credit open can help improve your credit score thanks to two factors – your credit history and your credit utilization rate.

Credit history

Your credit history is a record of how well you handle debts. This is determined by:

  • How many credit accounts you have
  • How long they have been active
  • How much you owe
  • Payment punctuality
  • Recent inquiries

Having an active credit history is one of the many factors that affect your credit score. In fact, it makes up about 15% of your credit determining factors.

Closing a credit account will take away from your credit history. This could lead to a negative impact on your score.

Credit utilization rate

A credit utilization rate is the percentage of your available credit that is in use. This is calculated by dividing the amount of debt you owe by the amount of your credit limit.

For example, if you have a total credit limit of $10,000 and currently owe $1,000, then your credit utilization rate would be 10%.

The ideal utilization rate is 10% or below. You should also note that your utilization rate makes up approximately 30% of your credit score.

With this in mind, it’s important to keep multiple lines of credit open. Try to use them at least twice a year to show that you have an active credit history and are responsible enough to handle debt.

Don’t Sign Up for Any More Credit Cards

While having “too many” store cards isn’t necessarily a problem, you should still be cautious of signing up for more now that you’re informed of their drawbacks. Every credit card application requires a “hard” inquiry into your credit history. These inquiry types can have an effect on your credit score for up to six months.

Also, every credit card account that gets approved is another account that you have to manage. Keep the hassle and temptation away by declining any new offers of credit from retail stores or pre-approved offers.

Stay in Control of Your Credit

Remember, we’re here to help if you have any questions about your credit or debt history. Our credit coaches can help you set up a budget and review the options available to help you pay down your excessive debt. 

Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.
Melinda Opperman

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over 19 years experience in the industry.