With all of the credit card offers out there, is it possible to have too many credit cards?

Statistically, the average American carries between two and six credit cards.

Some carry as many as fifty! How many is too many?

Many people today think that more credit means more buying power.

They also think that it means a positive credit score, but that’s usually not be the case.

The Number of Cards and Your Credit Score

When your FICO score (credit score) is computed, one of the things considered is how many credit cards you are holding. Typically, the more cards in your wallet, the higher the possibility of you getting in over your head. So even though you may have 15 or 20 cards and all of them with good payment histories, you are still viewed as a high credit risk.

So how do you know if you have too many credit cards? Here is a simple guideline to help you figure it out.

Your Debt to Income Ratio is Key

There is a number that is called the debt to income ratio. This is figured by dividing your total monthly debt payments by your total net monthly income and multiplying the result by 100 to reach a percent figure.

Ideally, this number should be less than 37%.

Let’s look at an example:

Sam has 5 credit cards and pays on them every month.

His total debt payments are $1725 and his net monthly income is $5500. So we divide the payments by the income and multiply by 100:

$1725 / $5500 = .3136 x 100 = 31.36%.

Sam’s debt to income ratio is 31.36% which is good enough.

This means that for every dollar Sam earns, 31.4 cents is spent on credit card debt. All of this information is entered on a credit card application, so card issuers have all the variables to figure this out. A credit card company would probably issue Sam a credit card.

Another thing that credit card companies look at is the mixture of credit accounts in your file. Other types of credit accounts include car loans, student loans, mortgages and personal loans. If you have several credit cards but no other types of credit accounts, your score could be affected negatively.

Trouble Managing Your Payments

The easiest way to figure out if you have too many credit cards is by looking at how much trouble you have managing your payments. If you are holding 15 cards and lose track of whom you paid and who you didn’t, you have too many credit cards. You may want to consider canceling some of them. Take this consideration very carefully, though.

You want to cancel cards that won’t hurt you in any way. Take into consideration how much debt you have and what the total credit lines are on all your cards. You will want to keep the difference between your available credit and what you have used under 50%. Simply, if you owe $10000, then your cards available credit should total $20000 or more.

Also don’t close your oldest accounts because you found a better rate or reward card. Card issuers want to see a lengthy, positive payment history.

The right number of cards is different for everybody. Check your report regularly and cancel unused cards if you need to.

Just keep your numbers in mind: Debt to income ratio at under 37% and your debt to available credit ratio less than 50%.