How many credit cards should you really have?

This is one of the most common questions people often ask when applying for credit cards.

According to Experian, an average American has a total of four cards. There are a few things that can help you determine how many credit cards are too many.

You Find It Hard to Track Your Accounts

You already have too many cards if you can no longer track your balances, due dates, and other information on your accounts. The number of cards is not an issue here. You can have six cards and still manage them well or you can find it daunting enough to handle a card or two.

You Have Credit Card Debt

There should be no shame here. Most of today’s credit card users carry credit card debt and it was revealed that an average household owes a credit card debt worth $5,700.

This means that you are not the only one with credit card debt. The only sad news here is that this kind of debt can get really expensive.

0% balance transfer cards are the best way for you to free yourself from debt at the least possible cost since you can stay away from interest for as long as 21 months. You also need to address that behavioral aspect of the reason why you incurred the debt in the first place.

There are people who manage to stay debt-free that make them the best candidates for a reward credit card. As for those who always fall into the trap high cost debts, it might be better off for them to avoid credit cards completely.

Your Credit Score is Hurt Because of Your Credit Card Applications

The more nuanced take on the issue has something to do with your credit score. Whenever you apply for credit cards, the credit card issuer will check your credit, placing a hard inquiry on your report. All of these can usually trim 5 to 10 points off your credit score for a very short period of time, often 6 months or so.

Applying for too much credit at the same can get you into trouble. This can make you look desperate and risky. There is a belief that Chase follows the so-called 5/24 rule. This means that if you opened 5 accounts or more for the past year, Chase won’t approve your application for a new card. There are also other issuers that seem to implement similar policies.

Generally speaking, it should just be fine to apply for a new card every 6 months or so provided that it fits in your key financial strategy. You shouldn’t be closing your old credit cards, either. This can affect your credit utilization ratio, a crucial factor in your score.

If you don’t get enough value from your card with annual fee, stay away from the fee and retain your payment and credit line history through asking your issue for product change.

The number of credit cards that you can have all depends on your own situation. Know your limits and you will be good to go.