Is it possible to carry too many credit cards?Thursday, June 07, 2012 at 5:10:02 PM
After years of starting to turn away from credit card borrowing because of the high cost often associated with doing so during and following the recent recession, many are now beginning to wade back into the practice of doing so.
But if your credit score dipped so badly during the recession that you could no longer open new accounts, and you've once again begun receiving credit card offers once again, you may be wondering just how many cards you should carry. In the past, you may have questioned if there is such a thing as too many credit cards in your wallet. Unfortunately,
there's no easy answer.
Consider where you've been
Each consumer is different, and the financial situations they face will be as well. For instance, you can have five credit cards in your name and, as long as you make sure to pay all the bills in a timely fashion and keep spending limited, you might never have a problem dealing with these accounts. Conversely, others with just one credit card can overspend significantly on that account and end up missing payment due dates and racking up large amounts of debt that can be extremely difficult to pay back.
As a consequence, the question you ask instead should be, "
Can I afford this many credit cards?" The best way to determine this is to review spending and repayment habits on the old accounts before looking at any offers for new ones. This will help you to determine just how large of a balance you're carrying from one month to the next, and what the payments you're making into those accounts are costing you every month. If it's determined that the cost for the existing accounts is just about as much as can be reasonably borne, then it might be wise to avoid opening a new card.
But don't be dissuaded
That's not to say that new accounts can't come with benefits. Some might have 0 percent interest rates for the first six, 12 or 18 months the account is open, which can be beneficial as long as spending is kept under control during that time. Similarly, rewards accounts can often make credit card use slightly more affordable depending on spending habits. Again, it's important for you to
think about your current credit card habits when considering if a new account is right for you.