How Many Credit Cards Should You Carry?

This story was originally published by Investopedia.com on May 15, 2012

Ever wonder if there are a right number of credit cards you should have? Or better yet, at what point does carrying too many credit cards affect your credit?

Several experts weigh in on this issue.

The Experts John Ulzheimer

President of Consumer Education at SmartCredit.com and recognized credit expert John Ulzheimer says that there is no optimal number of credit cards to have. The number is going to vary from person to person based on your own personal credit card needs. Some people function just fine with one card. Some people need more because of business travel. A good rule of thumb is not to focus so much on how many, but more so on how you’re managing the ones that you do have. For example, someone with one maxed out credit card is going to have a lower credit score than someone with five unused credit cards. If you can keep your aggregate balances to no more than 10% of your credit card limits then you’ll be in great shape regardless of how many you choose to have.

Kevin Gallegos

Credit and debt expert and vice president of Phoenix operations for Freedom FinancialNetwork, LLC, Kevin Gallegos advices consumers to use only one credit card. “Most adults need to carry one credit card for personal business. It is not necessary to use more than one,” he says. Make sure, however, to pay on time, every time; charge only what you can pay off in full each month (in other words, live within your means). On-time payments are the most important factor in developing good credit and upping or maintaining credit scores. He warns credit users, “If you hold other cards and wish to no longer use them, think carefully before canceling a credit card with a long (positive) history. The longer you hold a card, the more valuable it is in your credit score determination. So, do not close other accounts, but put the cards away in a safe place.” This is not to say we should not use credit cards, on the contrary, Gallegos emphasizes using credit. Credit cards can be especially helpful for significant purchases like electronics, where you might need to take advantage of the extended warranty that is sometimes offered with a card. A credit card also offers greater protection against fraud with online purchases. If you need to dispute a transaction, you can report it to the card issuer. You are not liable for the charge until the dispute is resolved.

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