Credit cards

The right number of credit cards to have | More intelligent

Is there a recommended number of credit cards to have?
At the start of 2021, American consumers held an average of three credit cards each, according to credit bureau Experian. There is no single answer as to what is the best number of credit cards to have, as it depends a lot on your financial situation, spending habits, and ability to handle payments.

But as a general rule, Penny suggests it’s helpful to have at least two credit cards so that you have a backup in case you lose one or your account is frozen because you are the victim of fraud.

What are the best ways to use credit cards to help with my credit rating?
An important part of your credit score is your credit utilization ratio, which is the credit you use divided by the credit you have. You can find your available credit on your billing statement or by logging into your online account or calling customer service. Many people recommend maintain this ratio below 30%. However, credit bureaus say people with the best credit scores often keep it below 10%, says Ted Rossman, senior industry analyst at personal finance site Bankrate.com.

As an added tip, you can improve your credit utilization rate by requesting a higher credit limit or paying your credit card bills earlier. This rate is usually calculated on your statement date, and you can reduce it if you make an extra payment or two in the middle of the month.

How can I effectively manage my credit cards?
The first rule is to pay your bill on time every time, Matt said. To avoid missing a payment, you can set up automatic payment to make at least the minimum payment each month. Otherwise, you risk damaging your credit score.

Second, it’s important to be aware of the annual fees you pay for your credit cards, says Natalie Slagle, founding partner of Fyooz Financial Planning in Rochester, Minnesota. If the fees outweigh the benefits and advantages of a card, then this card may not be the best one for you.

You should also use your credit cards according to the benefits they offer. For example, if you’re buying a new TV, you might be better off using a card that offers a generous extended warranty, even if that card doesn’t offer many short-term rewards, Ted says.

Although it can be a lot of work, some people may find it useful to keep a spreadsheet that lists all relevant information about their cards, including annual fees, renewal dates, and benefits such as rewards, warranties extended stays, travel insurance, food delivery. memberships, and so on to keep track of all that information. And it’s important to stay alert to any changes to your card benefits by checking your card issuer‘s mail or email.

If you are not really using the benefits of your credit card and are paying too many fees, you can ask your card issuer if you can switch to another card that better suits your needs and ask if the exchange will hurt you. your credit score. If the exchange is classified as a product change, you can keep your line of credit and account history and avoid having to file a whole new card application. For more ways to cut your credit card costs, check out our list of money-saving tips.

Bonus reading: Should you close credit cards you don’t use? Here is our opinion.