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How Many Credit Cards Should I Have?

03/20/2012 05:54 PM ET

How Many Credit Cards Should I Have - Learn how to say no when credit cards become a problem and know just how many you should have without going overboard. Paying only the minimum each month will raise a red flag if you have too many balances. Some people have several, upwards to 10, but is that a good idea?

For the average consumer, 3 or 4 open revolving accounts should be plenty. If you keep the balances low, pay everything on time, and don’t get in over your head, having more than one can also show responsibility to a bank. Some people have one just for business-related purposes.

If you use them responsibly, then it can be positive. It can be a destructive thing if you become irresponsible, and that will have an impact for several years. One major factor is the percentage of the available credit they maintain.

The FICO structure evaluates the ratio to debt. The lower the number, the better it is on your file. There is also the danger of acquiring “too many” when applying for a car loan or mortgage, so always keep that in mind.

If a person is concerned about their rating, they will not get any extra points for getting the right number of cards. It can also hurt a person’s rating by having multiple open accounts. Some consumers have seen their score drop after they acquire a new one because there’s no history to base it upon.

The other thing to think about is how you will use them. Will you be keeping a zero balance on them? If so, it may be a good idea to find a rewards program, such as American Express or Discover.

As long the rewards card offers a grace period while racking up points, cash back, etc. You can get something for nothing! If you carry a balance, look for a low interest rate. Just remember the “ratio” and keep it at a minimum.

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