How many credit cards is too many? That’s the golden question. Let me tell you about my friend Todd, who loves his credit cards so much he carries ten of them in a high-end designer bag. Despite his love for plastic, Todd is living in a modest apartment and struggles with considerable debt, all while driving a leased luxury car. It got me thinking: maybe all these cards are more of a curse than a blessing.
For folks who’ve had debt problems, the answer to “how many credit cards?” is simple: zero. Staying away from credit cards helps them avoid falling back into debt, much like how recovering alcoholics should stay out of bars.
Personally, I suggest having at least one credit card. They’re useful for emergencies, they let you borrow money for free for a month, and they come in handy for earning rewards points or replacing lost cash.
At one point, I had five credit cards, seduced by 0% introductory rates. It seemed clever at the time, but the “spend more, save more” mentality eventually wore me down. It became a hassle to keep a constant balance, so I shifted towards a more straightforward approach to spending.
By 2001, I pared it down to just two: an American Express corporate card and a Citibank ThankYou card, thanks to my long-standing relationship with the bank. This made tracking my expenses much simpler and helped me save money by sticking to a clear budget.
Now, I’m back to having three cards because of a tempting offer that included a 0% APR and bonus points. It’s a reminder of the old days when I juggled multiple cards. Sure, the rewards are tempting — think about earning enough points for several round trips to Hawaii just by making regular purchases! However, there’s a catch: car dealerships, for example, limit how much you can charge to your card.
There are significant risks to managing multiple credit cards:
1. More Cards, More Temptation: It’s easier to overspend with multiple cards, each with its own perks and credit limits. It’s like being at a buffet — the more you see, the more you eat, even if you’re not hungry.
2. Diminishing Returns on Rewards: If your spending doesn’t increase, the extra rewards from multiple cards won’t add up to much compared to using a single card.
3. Debt Risk: Credit cards have some of the highest interest rates around. More cards increase the temptation to spend, raising your risk of debt.
4. Credit Score Impact: While having multiple cards can sometimes improve your credit score by increasing your total credit limit, each new application can also ding your score. Plus, managing multiple payments can get complicated.
In the end, it’s about knowing yourself and your spending habits. For some, multiple cards fuel financial success through savvy use of rewards and benefits. For others, a single card is a safer bet to avoid debt and financial stress.
Remember, the best number of credit cards is the number you can manage responsibly without jeopardizing your financial health.
