Is It Bad to Have a Lot of Credit Cards?

If you have a lot of credit cards, it can have a negative impact on your personal credit rating.

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Any good credit repair company in Dallas, Texas will tell you as much. This is because even though maintaining a low credit utilization ratio is good, having too many credit cards can damage your credit score.

If your credit cards also happen to have zero balances for several years due to inactivity, your credit card provider may stop sending account updates to credit bureaus. If this happens, lenders and other financial services companies may have a hard time determining if you are a responsible credit borrower.

Another thing to remember is that closing unused cards may negatively impact your credit score–this is because such a move will shorten the length of your credit history, leading to a lower score. It’s also important to know that credit repair is not illegal in any state. 

You can avoid these types of problems by spending small amounts on the cards you rarely use and then paying those credit card balances in their entirety by their due dates. This way, your credit utilization rate will remain low, and you can show lenders that you are a reliable debtor.

How Many Credit Cards Should One Have?

Many people wonder if they should have more than one credit card. It’s not a good idea to have too many cards, especially if you don’t want to end up with a massive pile of debt you can’t afford. Having multiple credit cards with outstanding balances can make your debt repayments highly unsustainable.

However, there is no definitive number of credit cards a person should have. For instance, according to financial experts, having several credit cards can be a double-edged sword since it can either help or harm your credit score depending on how well you manage them. You should also know whether or not it is bad to pay a credit card early if you plan to have more than one credit card.

Regardless, this has not stopped many Americans from taking advantage of credit cards. Recent reports show that the average American currently holds four credit cards, which is slightly lower than in previous years. One of the reasons is the coronavirus pandemic that created a lot of financial uncertainty among U.S. consumers, some of whom took steps to reduce their credit card debt.

If you have several credit cards, it may help you keep your credit line utilization ratio for each card lower than the advised 30% by spreading balances across the cards. Also, having several cards does have other potential benefits, such as reward points to optimize earnings in spending categories.

The Ideal Number of Credit Cards

Spending habits and the ability to pay bills on time is usually a fine line people walk when using credit cards. As mentioned earlier, the average American has four credit cards. This is because most people build their credit portfolio over time, especially as they age and their credit needs expand.

Nonetheless, it is essential to note that one usually has to be eighteen years or older to apply for a credit card. In some situations, the borrower needs to be twenty-one years old to be considered. As you start with credit cards, it is a good idea that you practice and maintain good financial habits–a reliable income helps a lot, but other factors to consider before applying for credit cards include your:

  • Organizational awareness

  • Ability to meet deadlines

  • Understanding of money management

Considering how and where you intend to spend money is also very important with credit cards. Most cards offer specialized reward points and other benefits that can add perks to your regular spending. If you like stacking up points, you may want to consider cards as a way to maximize on grocery, gas, or travel expenses.

Final Thoughts

The key to being responsible with credit cards is to develop good credit habits, regardless of how many cards you have. Make timely payments and don’t use too much of your credit limit. These simple steps can have a powerful effect on your credit score, and if you’re still looking for guidance, The Phenix Group is here to help.

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