You might feel comfortable with a bunch of credit cards in your wallet. In your mind, if anything happens, you have access to emergency cash.
Credit cards certainly serve a useful purpose in an emergency. If you need a car repair and don’t have money in the bank, or if you need an immediate home repair, a credit card can be a godsend.
Although useful, you may discover that you have to many credit cards. There are no hard and fast rules regarding how many credit cards to have in your name. And if you’re able to pay all your bills on time each month, or if you don’t carry a balance, it doesn’t really matter the number of credit cards you have.
But if you have a difficult time juggling multiple accounts, it might be time to scale back your number of cards. Here are four signs that you may have too many credit cards.
You have forgotten cards
Every consumer is encouraged to pull his or her credit report each year from AnnualCreditReport.com. This is an excellent way to check for identity theft and to ensure that all your account information is accurate. However, after pulling your credit report you may stumble upon forgotten cards.
The fact that you don’t remember these cards indicates that you may have too many. Even if you always keep these credit cards at home, the card number can fall into the wrong hands. Rather then hold onto accounts that you won’t use, consider canceling these credit cards.
Your credit score gradually declines
If you pay your credit card bills and other bills on time each month, yet your credit score slowly declines or plateaus, this can indicate too many credit cards.
Understand, however, that your credit score will only decline if you maintain large balances on these cards. In other words, if you have 10 credit cards each with a zero balance, you’re likely to have a high credit score. But if the balances on these credit cards are more than 30% of your credit limit, your score will drop.
Some people can have multiple credit cards and never feel tempted to spend, whereas the temptation is greater in others. If you’re looking to decrease your credit card debt and get a handle on your finances, pay down your cards and then slowly close some of your newer accounts.
You have a hard time getting a loan or a new credit card
If you have multiple credit cards, and each card has a balance, applying for a loan or another credit card may prove challenging. This is because lenders and creditors will check your credit report before hand, and if you have a lot of credit card debt, they may conclude that you’re overextended and don’t need another line of credit.
You can’t pay your minimum payments
Credit card minimum payments are only about 2% to 3% of the outstanding balance, which isn’t a lot if you maintain a low balance. But if you have multiple credit cards, it can be difficult to keep up with your monthly payments. This is a clear sign that you have too many cards. If you have difficulty paying your minimum payments, this can trigger missed payments, which can ultimately damage your credit score.