Every day, you are bombarded with credit card offers when you open your mail box, when you shop online and when you visit your bank’s website. But, mindlessly filling out every credit card application that comes your way can be dangerous to your financial health. Look for these signs that you have too many open credit card accounts.
Do You Have Too Many Credit Cards?
1. You don’t remember which retail cards you already have.
Have you ever looked inside your wallet and found a card you didn’t remember applying for? Do you stand at the register in stores wracking your brain to remember whether you already have that store’s card? Losing track of cards can have negative effects that include missing payments, forgetting about recurring charges and failing to catch fraud before it harms your good credit.
2. You are being turned down when you apply for new cards.
When you have too many credit inquiries, it tells card issuers that you may be seeking too much credit. You also lower your score when you have high utilization ratios. Before applying for a new card, ask yourself whether you really need it. It can take about a year for each inquiry to fall off your credit report. The effect of inquiries is low. But, if you have marginal credit, each new credit card you apply for can mean missing out on bigger benefits like lower insurance rates, better deals on car loans and employment at companies that require a credit check.
3. You’re having trouble tracking your spending.
When you need to check five or six statements every month, it can be difficult to keep a handle on how much you are spending. Try cutting down to using one or two cards to get a better idea where your money is going. No need to close the extra cards. Just keep them stored safely away so that you aren’t tempted to use them.
4. You are getting hit with late fees.
Having seven or eight cards also means having seven or eight due dates. When you have payments due all throughout the month, it can be easy to miss one. But, this can result in late fees and even punishingly high APRs. Set all of your credit card accounts to autopay at least the minimum every month. Can’t afford the minimum on all your cards? You are overspending and need to cut back. Talk to your credit card companies about closing cards and negotiating a lower payment while you get rid of your debt.
5. You’re opening new cards because the old ones are maxed out.
Getting more credit to deal with your debt is like handling obesity by buying a bigger belt. At any given time, you should not be using more than 30% of your available credit. In fact, some credit experts recommend having no more than 10% utilization at any given time. If you are drowning in credit card debt, more debt is not the answer. Go over your expenses and find out what you can cut. Often, we have expenses such as memberships, meals out and new clothing that can be cut while we get on top of our spending.
There is no one answer to the question of how many card you should have. But, if you are finding that you can’t manage your credit card debt, it is time to scale back to a level that helps, not harms, your financial health.