Credit myths debunked: How many credit cards is too many?

Credit cards can be a tricky subject. As we've covered before, your credit score plays an incredibly important role in your financial life, and credit cards are naturally a major element in building up - or hurting - that score. But how many credit cards too many? How many credit cards should I have? Ask around, and you're probably going to get a lot of different answers to each question, making this a confusing and stressful topic for countless consumers.

This blog is the first in a series about credit myths, and our goal is to help you better understand how credit works and what you can do to set yourself up for financial success. The myth we're debunking today: the idea that there is such a thing as "too many" credit cards.

Credit concerns
That may seem like a surprising claim. After all, a lot of people, especially younger consumers, are pretty hesitant when it comes to applying for and using credit cards. As we pointed out in this earlier blog, a Facebook IQ study revealed that a large portion of millennials are afraid of credit and debt, and that mindset is stopping them from getting their own credit cards. We also noted that 63 percent of 18 to 29 year olds don't have a single credit card, according to Bankrate and Princeton Survey Research Associates International. 

He must be part of the 37 percent.He must be part of the 37 percent.

Clearly, young consumers don't seem to like credit cards, and they're particularly afraid of taking out credit that they can't pay back. To a certain extent, that's a good mindset to have. Debt is a huge problem in America: The average household has more than $130,000 in debt, and more than $15,000 of that debt comes from credit cards, according to Nerdwallet. And failing to pay back the credit you owe will seriously damage your traditional credit score. 

Don't fear the credit
Given all of that, you might think millennials are right to be skeptical of credit cards. But there are two key problems with this line of thinking. 

First, you need to use credit cards to build up your credit. Never actually taking out credit in the first place will leave you with a low credit score. Your rate will quite possibly be even lower here than if you took out too much credit.

Second, having one or more credit cards won't automatically lead to major debt or damaged credit scores. It's very possible to use credit cards responsibly. 

And now we come back to the issue of the ideal number of credit cards, and whether you can have too many.

"The ideal number of credit cards is however many you can manage."

The bottom line here is that while you should definitely have at least one, the ideal number is however many you can successfully manage and actually make use of. Writing for Mint, John Ulzheimer, who previously worked for FICO and Equifax, explained that he had 14 credit cards himself. That'd be far too many for most people, but he managed to pay them off on time and keep $0 balances on all of them, and that was great for his credit score. 

The best approach? Start with one credit card, use it, and pay it off fully on-time every month. If you start approaching your maximum spending limit while still paying off your credit every month, then it may be time to apply for another card. It's very damaging to hit or exceed your credit limit, so make sure to have another card in your wallet if that's a risk. However, you should never take out another credit card or line of credit solely to pay off a different one - that's a dangerous spiral.

And remember: What matters most is that you pay off all of your credit cards on time. Do that, and your credit score will go up and up.

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