Do you have more credit cards than you can handle? These are the signs that it's time to cut back.
There's no one-size-fits-all answer to how many credit cards you should have. Some consumers prefer one or two cards. Others open many different cards to take advantage of all their different benefits.
There are, however, some signs you've opened too many credit cards. In that situation, your cards could be doing you more harm than good. If you notice any of the following issues, canceling some of your cards could be the best way to get control.
1. You're missing payments
Every time you miss a credit card payment, the card issuer can charge you a late fee. Once a payment is 30 days or more late, it will do serious damage to your credit score.
A single missed payment could be an honest mistake. Credit card companies will also usually waive your first late fee as a courtesy if you call and ask.
Multiple missed payments are a sign of a larger problem. If you can't keep track of all your credit card payments, you probably have too many cards to manage.
2. You're getting into credit card debt
It's fine to have multiple credit cards when you control your spending and pay them off in full every month. This is a great way to maximize credit card rewards without paying any interest.
But as many consumers find out, keeping your spending in check is easier said than done. It also gets more difficult when you have more credit available.
If your cards' balances have been creeping upward, try to focus on paying off your credit card debt, and then cut back on your credit cards. Over time, interest charges will cost you more than what you can earn from any perks on your credit cards.
3. You can't keep track of which cards to use
The tricky part about having rewards credit cards with different bonus categories is remembering which cards to use for which purchases.
You could certainly earn more rewards when you have cards for gas, groceries, dining, wholesale clubs, and so on. But this does make the checkout process much more complicated.
If you're constantly questioning which card to use, you'd likely benefit from simplifying your options.
4. You've lost opportunities for sign-up bonuses
Sign-up bonuses are one of the most rewarding parts of opening new credit cards. Given how valuable these bonuses are, it's also a big loss if you miss out on one.
Not fulfilling the requirements for a sign-up bonus almost always means you're having trouble managing your credit cards. That's especially true if you were trying to get multiple bonuses simultaneously.
5. Your credit score is dropping
Credit card applications and new credit card accounts are both factors that can affect your credit score. However, they're two of the smaller scoring criteria, so they don't have too much of an impact. Your payment history and your credit utilization ratio are much more important.
Assuming your payment history and your credit utilization are good, your credit score should either be stable or on the rise. If it's going down, you may have opened too many credit cards recently.
6. The annual fees are wrecking your budget
Credit cards with annual fees can be worth it for the features they offer, but having too many of them can become a problem.
You could find that all the annual fees you're paying get in the way of your financial goals. Even worse, they could be making it harder to pay your bills. In either of those situations, you need to get rid of at least some of those cards.
Keep in mind that you can often downgrade a credit card to a no-annual-fee version instead of canceling it. Downgrading is a good alternative if you'd like to keep the card open and avoid the annual fee.
7. You have credit cards you never use
It probably doesn't make sense to keep a card you never use. You're not benefiting from it. It's just one more card to manage.
There are two exceptions: The first is that you shouldn't close your oldest credit cards. Since the age of your credit accounts is part of your credit score, you're better off keeping older accounts open.
The second situation when it's bad to close a credit card is if it will significantly raise your credit utilization. Closing a card means you lose its credit line, so your credit utilization will go up. That could hurt your credit score if you have high balances on other credit cards.
As valuable as the best credit cards can be, you can have too much of a good thing. All the issues above are reasons to reconsider how many credit cards you have. In this case, cutting back could help you come out ahead.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.