How many credit cards do you need?

Credit CardsSome people manage with no credit cards so it is possible to survive without a credit card at all. Realistically however our society runs on the convenience of credit cards as a form of payment. There is no perfect number of cards you should carry but here are some tips to consider:

  • If you travel and need a credit card to book a hotel room, or if you use a credit card for making purchases on-line, one credit card is probably enough.  Choose a card that has low fees, and perhaps earns points or other discounts, and be sure you repay it in full each month.
  • Some people will also have a credit card for business use, or as a back-up in the event that their primary credit card company is experiencing technical difficulties.  In that case two credit cards may be acceptable.
  • Having a credit card is a way to improve your credit score. But you don’t necessarily need 5 or 6. The number of credit cards you have is not what is important to your credit score, it’s how you manage those cards. Missed payments and too many accounts with balances harm your credit. Having two cards, each with a $0 balance, is better than 6 cards with outstanding balances.
  • The more cards you have, the more you may be tempted to use the credit (debt) on those cards. Sometimes, less is better.

If you are carrying a balance on more than one credit cards each month, you have too many credit cards. The perfect amount of credit card debt is zero, since credit cards are a very expensive way to borrow. So look in your wallet, and if you are carrying a balance on any credit cards, consider your debt repayment options, and then cancel any credit cards you no longer require.

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