How Many Credit Cards Is Too Many?

When you borrow money today, you are robbing your future self of money to pay that debt. This is especially true if you have too much credit card debt.

The average American owes over $6,100 in credit card debt. Meanwhile, many feel less confident about their abilities to pay off the increased debt they are accruing.

Having too much debt and too many credit cards will financially backfire if you don’t have a budget and a plan.

Here are four ways to determine if you have too many credit cards.

Are you a shopping addict?

Far from being a pop culture trope, shopping addiction, also know as impulse buying, is a real thing. The typical American buys $5,400 worth of consumer goods that they don’t want, need, or bought on sheer impulse.

Ask yourself: do you have credit cards that are dedicated solely to impulse buys?

Make a transaction diary to study how often and why you use your credit cards. And consider the financial consequences of borrowing money via credit for the purpose of impulse buys.

Do you really need credit cards for impulse buys?

High credit utilization

Your credit utilization rate is the amount of your credit line that you use on a regular basis to make charges.

If your credit utilization rate is more than 30% on each card, then your credit score could be adversely affected. Reconsider why you are making so many charges and why you have so many credit cards.

Does your income justify your card count?

The average American made about $48,700 in 2019 before the pandemic hit, and that amount might be lower for a lot of people.

You shouldn’t have a credit card if you can’t pay for it. Look at your annual salary and the number of credit cards you own.

Be financially honest about whether the number of credit cards you own is a tenable circumstance compared to your salary.

Why? Because paying for too many credit cards will become progressively untenable if you don’t have the salary to justify it.

Exorbitant interest rates

According to the Federal Reserve, the average credit card rate is 14.65%. However, depending on the kind of credit card that you own, your interest rate can be as high as 26% if you have fair credit.

Even if most of your credit cards have low-interest rates, owning too many will always cost you more in the end.

The more credit cards you own, the more interest payments you will pay, especially if you pay late or miss payments.