5 credit card mistakes even smart people make, according to a woman with 26 cards and excellent credit

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Courtesy of Holly Johnson

Holly Johnson.

• The author, Holly Johnson, has 26 credit cards. This number of cards requires some organization, self-discipline, and planning, she says.
• Having a lot of rewards credit cards makes it easy to lose track, buy things you don't need, and even rack up debt.
• There are plenty of ways to avoid the pitfalls of credit, including using a monthly budget, tracking your credit cards in a spreadsheet, and using common sense when it comes to signup bonuses and annual fees.

I have written about the fact I have 26 different credit cards plenty of times now, including how I manage them, how I choose which to use for what, and how I maintain an excellent credit score.

While I keep some credit cards for ongoing perks like free hotel nights and travel insurance, I use most of my cards to earn points and miles to travel the globe.

Yes, I know that 26 credit cards is more than most sane people want to have. And that's okay - I also know my hobby isn't for everyone.

And there are plenty of reasons most people shouldn't have any credit cards at all, let alone 26. There are just too many pitfalls for people to stumble through as they try to create a comprehensive rewards plan, not to mention the potential for debt.

I've seen a lot of people get into trouble over the years because they've tried to juggle too many cards without having a strategy in place. Here are some of the snags that can make things go wrong:

Not using a budget

One big problem with using credit card rewards is the fact that, if you're not careful, it's easy to overspend.

I avoid this problem by only using credit cards in conjunction with my monthly budget and spending plan. I only charge purchases I planned to make anyway, and this includes having "spending caps" in discretionary categories like groceries and entertainment.

If you don't use a budget and you use credit cards to rack up points, you may find out you're spending more than you realize on stuff you don't even need. And that brings me to my next point.

Getting into debt

Credit cards make it easy to get into debt, since they delay the pain of your purchases until you receive your monthly bill. If you wind up charging more than you realized, you can get stuck in a position where you can't quite pay off your balance and wind up carrying some of it over to the next month.

Read more: How to increase your credit score, no matter when or where you start

Since the average credit card interest rate is well over 17%, carrying even small amounts of credit card debt can be a slippery slope. One minute you have a few hundred dollars in debt and a few months later you have a few thousand. It happens all the time!

Not tracking their credit cards

Having more than a few credit cards at once is easier when you have a system to keep track of them all. I keep a simple spreadsheet that helps me know which cards I have, when I signed up for each one, when I earned a signup bonus, when the annual fee will be charged, along with other details.

Read more: I have 26 credit cards and no debt. Here's the best advice I can give you about managing multiple credit cards

If you have a lot of cards and you don't keep track in some formal fashion, don't be surprised if you struggle to remember which cards you've had in the past and when annual fees are coming due. It's easy to forget all those details anyway, but that's especially true when you have several credit cards to your name.

Pursuing too many signup bonuses at once

Signup bonuses offer one of the easiest ways to earn a lot of points in a hurry, and that's especially true if you sign up for multiple cards and earn bonuses on each one. Unfortunately, pursuing multiple signup bonuses at once can spell trouble in more ways than one.

Let's imagine for a moment that you sign up for two rewards credit cards within 30 days - both of which require you to spend $3,000 on your card within three months to earn 50,000 points in their respective programs. That's fine and dandy until you realize you need to spend $6,000 within a short amount of time - and that may be more than your bills and normal expenses add up to. So, what do you do? Some people wind up buying things they don't need to meet the minimum spending requirements - much to the detriment of their financial situation.

Read more: How to decide whether to use a credit card or a loan to borrow money

I avoid situations like this by only signing up for new credit cards to earn a signup bonus a few times per year. I also only pursue new bonus offers if I can meet the minimum spending requirement by using my card for regular bills and ongoing expenses like groceries and gas.

Paying too many annual fees

Another pitfall of juggling multiple credit cards is the tendency to overlook annual fees. Most travel credit cards charge fees of at least $95, and the best travel credit cards on the market charge upwards of $450 or more to account for their consumer protections and travel perks.

These fees can be well worth it, but they can also add up quickly if you don't pay attention. And fees may or may not be worth the cost to you personally, depending on whether you use your card's benefits or not.

Read more: Here's exactly what to do as soon as you open an Amex Platinum credit card to get up to $2,000 of value in your first year

The bottom line: Make sure to add up all the annual fees you pay and make sure each is worth it. If you don't, you're not doing yourself any favors.

Curious which credit cards I use the most and why? Here are some of my favorites:

• Chase Sapphire Reserve, because I earn 3x points on travel and dining.
• Ink Business Preferred Credit Card, because I earn 3x points on the first $150,000 each anniversary year in business categories such as social-media advertising and shipping.
• Hilton Honors Aspire Card from American Express, mostly for the Hilton Diamond status and travel perks.
• Discover it® Miles, because Discover matches all the miles you earn the first year.
• Blue Cash Preferred® Card from American Express, because I earn 6% cash back on up to $6,000 at US supermarkets each year; then 1%.
• Gold Delta SkyMiles® Credit Card from American Express, because I prefer flying Delta when I can.
• The Blue Business℠ Plus Credit Card from American Express, because I earn 2x American Express Membership Rewards points, up to $50,000 per year; then 1 times with no annual fee.
• Barclaycard Arrival Plus World Elite Mastercard, because I earn 2x miles on every dollar I spend.
• Chase Freedom, because I always max out the quarterly 5x bonus categories (up to $1,500; activation is required).
• Citi AAdvantage Platinum World Elite Mastercard, because I've been beefing up my stash of AA miles.
• CitiBusiness AAdvantage Platinum Select World Mastercard, so I can earn American AAdvantage miles on my business purchases.
• AAdvantage Aviator Red World Elite Mastercard, because I earned the sign-up bonus with a single purchase.
• Citi Premier Card, because I love the flexibility of Citi ThankYou Rewards.

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