What should you do if you have too many credit cards?

A credit card is a great financial tool. It allows you to buy the stuff you need by providing you instant credit during a cash crunch. If you play it smart, you can manage your finances better by leveraging the various features of a credit card. However, if you’re not careful, you can get buried under a pile of debt that can make your life very difficult.

Sometimes, however, people get too enamored with the offers and end up getting a lot of credit cards, which causes problems for them down the line. If you are in a situation like this, you may find benefit from the following advice.

How many credit cards one person should own depends on their financial situation and spending habits, but as a general rule of thumb, it’s not a great idea to get too many credit cards unless you’re super-wealthy. Here’s why:

Oftentimes, users are not aware of how exactly the credit cards work and end up overusing their cards without doing any kind of research. This could be a recipe for disaster.

More credit cards mean more debt: The greater the number of credit cards you have, the greater will be the debt. Remember, when you buy something from a credit card, you’re paying by borrowing money from the bank. If you fail to make those payments on time, not only would your credit score take a hit, but your outstanding balance will also accrue interest. A smaller number of credit cards will let you manage your payments easily.

Managing cards could be a pain: Different types of credit cards have different advantages. But if you have too many credit cards you may lose track of which ones should be used for which types of spending.

Don’t be swayed by heavy discounts: Credit card vendors, sometimes, offer great discounts on cards which may be tempting, but this is when you need to keep your impulses in check. If you already have a credit card or two, you shouldn’t think about getting a new one unless you’re extremely cautious with your payments.

Hard credit inquiries may lower your credit score: Every time you apply for a credit card, the hard inquiry will lower your credit scores a bit. Therefore, it is recommended that you refrain from applying for several credit cards in a short span – especially if you’re not sure whether your card will be approved or not.

Overall, it’s all about mitigating the risk that comes with getting a credit card. As long as you’re responsible with your finances and you aren’t overspending, you should be fine. However, even if you are managing your finances efficiently, you shouldn’t get too many credit cards.

Many people seem to believe that the greater the number of credit cards they have, the better will be their credit score. It isn’t always the case. It has more to do with how you use your cards than how many cards you own.

That said, there is a benefit of having multiple credit cards – it is the availability of credit. The greater the number of cards you have, the higher your credit limit. It is a good strategy to keep your utilization ratio low; however, you can mess up real fast by maxing out your credit cards.

If you’re failing to manage your credit cards efficiently, you may need to close the cards as the last resort.

Several situations warrant closing a credit card. Let us take a look at them.

High fees: Many credit cards come with high annual fees and if they’re not delivering the value that you desire, you should probably consider closing them.

Issues with the issuer: There can sometimes be problems with the card issuer that may force your hand to close the card. Unexpected charges or concerns regarding the way your payments are being processed are a couple of reasons that may make you think about closing a card.

You want another signup bonus: Some travel cards offer signup bonuses which can be availed every one or two years. If you’ve used your signup bonus and you want another, you may close your card and apply for it again.

If you’re troubled by the high annual fees but don’t want to close the card, don’t worry; there is a way. Some credit cards can be downgraded, which means that they won’t attract any annual fees. It is definitely something to consider.

In theory, as long as you’re managing your finances carefully, it doesn’t matter how many credit cards you own, but it is always smart to start with just one or two until you get a hang of things.