Is it good to have multiple credit cards? This is probably the biggest question people ask. You may find numerous myths but the fact is there is no such ‘perfect’ number for credit cards. What actually matters is how you deal with credit cards. If you want to maintain a good credit score, then you need to pay all the bills on time. You need to evaluate your financial approach in order to know if you're handling too many credit cards. Here goes some financial stage which will help you to get the answer of your question more clearly.
Check if your debt to income ratio is too high
Mortgage lenders will surely calculate your debt to income and may deny your loan application if the ratio is too high. Check your debt to income ratio in order to test whether or not you’re spending too much for your multiple credit cards. If you find your DTI ratio is above 37%, then you should close some of your unused credit card accounts.
Higher credit utilization means lower credit score
More credit card means more credit card balance. And it will increase your credit utilization too. Remember, you credit utilization should always be less than 30% in order to get a better credit score. Once your credit card balances rise, your credit utilization will rise equally. So, keeping less number of credit cards will maintain credit utilization.
Managing too many cards are a troublesome work
You will find difficulties to manage your multiple payments. You should be very confident if you can successfully keep track of all your credit cards. Credit card company may close your accounts due to lack of use or inactivity. Once your accounts get closed by the credit card companies, your credit score will be highly affected as it will decrease the total amount of credit score. So, you need to use them on a regular basis. Moreover, you need to take care of payment due dates, interest rates and fees. Managing less card is much hassle free work even in this advanced technical life as its very hard to keep track of multiple accounts.
Some basic facts you must know
As per experts, one credit card is fine for a starter who wants to build credit. People need to gather experience in order to manage multiple credit cards as it requires responsibility and knowledge. Once you have experience with on single credit card and you’re quite confident about your ability to take care of other credit cards, then you can go for another. When you find yourself exhausted to manage your series of credit cards, then it means you’re too weak to control so many cards.
Lastly, having few (2-3) credit cards is good if you can handle them. It becomes easier to meet different types of need. As example try to keep one reward credit card for common purpose to earn points. And another one for emergency need or backup (medical bills, stolen, lost). But, remember applying for too many credit cards at a time is not advisable.