Credit cards – can you have too many?

Subscribe To Our Blog

If your mailbox looks anything like mine, you probably get a few different credit card offers each week. Some boast a 0% APR, some have a rewards program, and others offer 0% balance transfers. But how do you know what credit card is best, and is there such a thing as having too many cards?

About three out of four U.S. adults have at least one credit card, according to a 2016 Gallup report.  But there really is no magic number for how many credit cards a person should have. Some financial pros say one card is enough, whereas others advocate for using multiple credit cards. We’ll breakdown the 2 schools of thoughts to help you determine how many cards you should have in your wallet.

Multiple cards

If you pay off any credit card usage at the end of each month, having multiple cards may be the right strategy, especially if you can reap rewards. There are rewards for everything from airline miles, gas cards, to cashback. Choose the one that gets you the most rewards that are useful to your lifestyle. Don’t sign up for an airline reward card if you hate flying, instead choose a card with cash back or gas rewards.

Using multiple credit cards could positively impact your FICO score by helping improve your debt-to-credit utilization ratio. The rule of thumb is to keep this ratio below 30% – the lower the better. BUT – make sure you use that credit responsibly—having additional lines of credit doesn’t give you license to charge more.

It helps to have a backup credit card if you’re in a pinch. While chip cards have made it more difficult for hackers to steal credit card information, it still happens to about 22% of Americans based on a Gallup poll. If your credit card information is compromised, it typically takes several days to get a new one, so having a second one on hand as a backup can be helpful.

One card

Carrying a greater number of cards means the potential for racking up a greater amount of debt, despite all the potential benefits. If you destroy your credit score by consistently missing payments on multiple cards, it could take years to rebuild that number. Consider these benefits to having only 1 credit card.

It’s easier to manage. Having only one or two credit cards means fewer statements to review each month, and less bills to pay out. The more credit cards you have, the greater number of billing cycles you’ll likely have to keep track of and to make sure you have enough money left in your account. Having multiple due dates scattered throughout the month can make this even more difficult to track.

It may be easier to track your spending. With multiple cards, you may not get a clear picture of your spending and find it hard to stick to a budget. Research shows that people tend to spend more when they shop with a credit card instead of cash. By reducing the number of credit cards you have available to you, you could effectively help limit your ability to overspend.

Keep that debt in check. Having fewer credit cards and a lower available credit limit means less opportunity to dig yourself into credit card debt. If you do carry a balance, it’s at least all on one credit card, which helps you see how much credit card debt you have—and have left to pay off—at any given time.

It reduces hard credit score inquiries. When you apply for a credit card, it triggers a “hard inquiry” on your credit report. A hard inquiry happens whenever a potential lender is checking your creditworthiness, and it dings your credit score by up to five points. Five points doesn’t sound like a lot, but they can add up over time and prevent you from qualifying for the best interest rates on various types of loans or lines of credit.

There is no hard and fast rule for how many credit cards you should have. The “right” number depends on your spending behaviors, financial goals and how responsibly you manage your credit.

Is your mailbox crammed with credit card offers? What are some of the best and worst offers you’ve seen?

 

 

 

 

 

 

Susan Dickinson
Assistant Vice President, Lakeville Manager
860.393.9171

Keeping up with Technology – the struggle is REAL!

Subscribe To Our Blog

If you subscribe to our emails (you can sign up here), you’ve probably seen a lot of information over the past year about security updates, fraud alerts, and the ways in which Litchfield Bancorp is constantly making upgrades in order to better serve you and keep your information safe. It’s not an easy job to keep up with technology and its rapid pace, but it’s a necessity that we take very seriously here at the bank. Continue reading “Keeping up with Technology – the struggle is REAL!”

Young Financiers – Sharing your household budget with your children – it’s a win!

Subscribe To Our Blog

Sharing your salary and spending habits with others has always been very taboo. But, is there ever a time to let the proverbial cat out of the bag and share that information with your children? We say – Absolutely! While we don’t recommend sitting down with your 5-year-old and trying to explain the family budget, we do think once they hit their pre-teens is a good time. Continue reading “Young Financiers – Sharing your household budget with your children – it’s a win!”

Keeping your company data safe with a mobile workforce

Subscribe To Our Blog

Technology has transformed the lives of millions of office workers, creating “work from anywhere” opportunities that provide flexibility, productivity gains, and increased happiness among the ranks. Continue reading “Keeping your company data safe with a mobile workforce”

Young financiers in the making need to know about ID theft

Subscribe To Our Blog

As our digital economy grows, consumers are paying a heavy burden in costs associated with identity theft and credit/debit card fraud. According to a report by Javelin Strategy & Research, 15.4 million consumers were victims of these crimes in 2016, up 16% from 2015. Continue reading “Young financiers in the making need to know about ID theft”

Creating a culture of caring is just good business!

Subscribe To Our Blog

We often talk about how Litchfield Bancorp is “locally owned and locally grown,” and it’s the truth! For more than 165 years, we’ve been here helping businesses, individuals, and community organizations succeed. Continue reading “Creating a culture of caring is just good business!”

Why we love Tails of Hope, our September Business of the Month

Subscribe To Our Blog

As a bank with a long history in Litchfield County — 165 years and counting! — we take our commitment to the community very seriously. We live, work, play, and volunteer here. Nothing makes us happier than helping local businesses and organizations thrive. Continue reading “Why we love Tails of Hope, our September Business of the Month”

5 Things to Ask Yourself Before Expanding Your Business

Subscribe To Our Blog

It’s a pivotal moment in an entrepreneur’s journey when they get the itch to expand their empire. Your business is fully off the ground! Pat yourself on the back for a job well done, then pump your breaks! Ask yourself a few questions before taking the plunge toward expansion. There are quite a few things that need to be carefully and objectively examined to make expansion successful.

Are you clear about why you’re expanding? Continue reading “5 Things to Ask Yourself Before Expanding Your Business”

How to Create a Personal Budget You Can Live With

Subscribe To Our Blog

Learning how to make your finances work for you should be a priority for everyone. If you’re reading this you probably care about your finances. At Litchfield Bancorp, we feel so strongly about helping you make your money work for you, that we put together some key points to assist with creating your very own budget. Use your discretion and be honest with yourself about your spending habits as you read. Continue reading “How to Create a Personal Budget You Can Live With”

Beware of these Wire Transfer Red Flags

Subscribe To Our Blog

We’ve all gotten the email from a long-lost relative, or poor soul in a foreign country who is in dire need of funds ASAP asking you to wire money.  This is just one example of Wire Transfer Fraud but cyber criminals are getting craftier and bolder.  On the rise are emails and phone calls from individuals disguised as “trusted people” from banks, credit card companies, and government institutions such as the I.R.S. Continue reading “Beware of these Wire Transfer Red Flags”