How Many Credit Cards Should You Have?

Nowadays, everyone holds a credit card. Well, almost everyone. While it is a convenient option for many of us, some also consider it ‘cool’ to flaunt a wallet full of different credit cards, especially when they are in a party or at a shopping mall.

But how many credit cards should you hold? How many credit cards will make you feel cool?

The one-size-fits-all solution does not work here. Therefore, a working professional can hold two cards while a fresh MBA should have just one or maybe none. But we must consider a few things here.

First of all, the maximum number of credit cards you can hold should depend on your ‘needs’ and not on your ‘wants.’ If you have been holding a large number of credit cards to fulfil your ‘wants,’ take that as a warning signal. Step back, understand your budget and then do away with that greed.

Secondly, the trick lies in using your credit cards wisely. Holding a credit card with up to 30-40% of utilisation is better than having a credit card maxed to its credit limit. Similarly, having three credit cards with low balances and regular repayments is better than holding three credit cards with high outstanding balances. The number of the credit cards held is the same, but the impact is quite different.

Finally, your spending habit is a key factor that impacts your decision to hold more credit cards. If you are a spendthrift, you may end up holding more credit cards irrespective of your income and your real need.

So there is no magic number when it comes to deciding how many credit cards you should really have. However, there is one way to find out if you are holding more cards than you can manage. If you associate with any of the following points, it’s time to cut down on your credit cards.

· You are unable to repay your credit card bills on time.
· You are repaying minimum amount due on your credit card and building up on the outstanding amount.
· You obtain your CIBIL credit report and find open credit cards that you have forgotten.

At times, less is better than more!
Satish Mehta is the founder and director of Credexpert, a credit and debt counselling company in India.
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