How Many Credit Cards do You Really Need?


It's a well known fact that credit card companies will give anyone a credit card. In fact companies are looking to give cards to people who "otherwise can't get credit," says Steve Rhode, president of Myvesta, in a report. But does that mean Americans should have as many as possible?

Some credit card experts will say that there is no set amount of cards that you should or should not have. It all depends on your ability to spend money and pay off the balances. But be warned: The more credit cards you  have, the better your chance of incurring more debt and destroying your credit.

Resist temptation Anyone can be tempted to get a credit card at their favorite clothing store if it gives them 10 percent off their purchase. However, that's the best time to turn it down. Having these additional cards will only add to your credit card balance, unless you plan to pay them off immediately.

Unless you can pay off your Banana Republic, Gap, Express and Home Depot card at the same time, you should only have one or two cards.

In case of emergency Many people use multiple credit cards as a savings vehicle. Or, they keep them on hand to pay for emergencies. However, if a payment is missed on any of the credit cards, then the late fees might be insurmountable. If this sounds familiar, then its time to reconsider how many cards are actually needed for emergencies.

Steve Bucci, a debt advisor for, proposes that you have at least two to six credit cards - and no more. The cards should be Visa, MasterCard, American Express or Discover. Most merchants will take most of those cards. And you should pay them off on time and regularly to maintain a low interest rate. This will ensure that cardholders will have the funds for real emergencies.

Keeping debt ratio down. If you're going to have more than one or two credit cards, it's imperative to keep your debt ratio down. Try to keep the debt ratio lower than 50 percent. If one credit card has a limit of $8,000, then keep the balance lower than $4,000. Another way to maintain a low debt ratio is to spread the price of large purchases over several cards. For example, instead of putting $5,000 down on one credit card for a purchase, spread the price over three different cards.

Common sense It's not a crime to have multiple credit cards, if you can pay them all off on time. But if the balance increases beyond the cardholders means then it's time to consolidate the balances or make a few financial sacrifices. The bottom line: use credit cards wisely, they're supposed to be a privilege not a life sentence.

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