Credit cards are convenient, for sure… but they can be a double-edged sword. Having too many can get you into financial trouble. But how many credit cards is too many? Here are five warning signs that could mean you have more credit cards than you should.
1. You’re struggling to keep track of payment dates
The first rule of making payments on time is… you guessed it: making them on time. That’s really the only rule! So if you find yourself missing payments or scrambling at the last minute to cover your bills, then you probably have too many cards to manage effectively. Missed or late payments will cost you—with late fees and potential damage to your credit score.
2. You’re making the minimum payment every month
If you’re consistently only making the minimum payments on your credit cards, that’s a sign that you’re probably overextended. Paying the minimum will keep you in good standing with your creditors, but it usually means you’re accumulating a lot of interest on what you owe. This can lead to increasing balances that become harder and harder to pay off, trapping you in a cycle of debt.
3. Your credit utilization is too high
Your credit utilization ratio—the amount of credit you’re using compared to your total credit limit —is a key factor in how your credit score is calculated. A high utilization ratio—which is anything over 30%—can make lenders see you as a high-risk borrower. If you see your utilization creeping up because you have so many cards, it might be time to think about reducing the number of cards you actively use.
4. You’re picking up lots of fees
Credit cards often come with a lot of fees: annual fees, late payment fees, balance transfer fees, and more. If you have several cards, these fees can add up fast; especially if you’re not using each card enough to justify its cost. A wallet full of cards can mean a stack of fees that cost you a lot and provide little in return. Look carefully at whether the benefits of each card are worth the cost.
5. You’re tempted to overspend (just because you can!)
Having multiple credit cards can make it easier to justify buying things you don’t really need. The more credit you have available, the more tempting it can be to spend more than you should. If you find that having several credit cards leads you to make impulsive buys or spend beyond your budget, then you might have too many. It can be harder to be financially disciplined when you have lots of spending options. Tracking your spending by category can be a helpful way to stay mindful of it—Brigit’s Finance Helper is a great way to do it.
