If you need a determination of the number of credit cards you need, then you should have your answer already as to how many credit cards is, well too many. There are three types of people that must be defined when gauging credit card usage. Different personalities contribute to the love or hate of a credit card. Determining how many credit cards are too many is often confused with how many you “want.” Some people falsely believe that you need a credit card to rent a car or use other services. In reality, all you need is a VISA or MasterCard in the corner of a debit card. There may be exceptions if you are trying to be a million dollar high roller at a casino, but in reality, you never actually need a true credit card. So what are the three credit card personalities?
First, many people will say that any number of credit cards is fine as long as you can pay the bills. These people fall into the classic confusion of need versus want. The problem with the mindset is that if you only paying the minimum balance, you are barely paying off the cards. These people believe they will figure it out, through budgeting, or finding extra income. There will never be too many credit cards, just too much money owed to the credit card company. That is a red flag right there. If you cannot pay off the balance of a credit card at the end of the month, then you are setting up more and more debt, while banking that you are 100% secure in your job and income, so it does not matter. Thus this person believes he or she is a financial guru.
Secondly, there are people that believe in the credit card use only for emergencies, such as medical bills or perhaps house utilities that will be shut off before the paycheck arrives. This is a very rational approach. More than one card is too many. These people see that aforementioned need in order to be ready when the unfortunate happens. Nothing is wrong with an emergency credit card as long as you can have the self-control to not buy on impulse just because you have the card at your disposal.
Lastly, others swear that you should cut each one up, pay off the balance, and never look back. These people are very cautious. One credit card is too many. People with this belief often keep an emergency savings account as opposed to an emergency credit card. This seems much more sensible, but depending on your income, saving up the equivalent of say a $5000 credit card, and leaving it alone can be overwhelming, tough to budget, and then put into action.
So how do you really determine how many credit cards are too many? The answer is that it entirely depends on the person and their view of credit cards. If you think you are slick and can spend away because you have a high-level professional job, then you are more of a risk taker. You can probably juggle the credit cards, while raising a credit score at the same time, although credit cards are probably not the smartest way to build credit unless you pay off the entire balance when a payment is due.
If you are someone who believes in the emergency usage of a card only, then you are in safe water. As long as you are not buying “just a little” on the side from time-to-time, you will never have to worry about getting to the point where a credit card balance is out of control. If you have used more than you can handle for a medical emergency, then a meeting with hospital administration often results in a giant slice of what you owe cut, and some of the balance even being paid by charity. The medical community is probably the most lenient in business when it comes to settling on a debt.
If you use no credit cards and merely have an emergency fund, then you are at zero risk of getting into debt with a credit card company. This is really the safest bet. If you can secure a decent savings that is used only for an emergency then you have proven that you do not need a credit card. You have intelligently taken your income and created a livable budget, sometimes cutting corners in order to reach that savings goal, but made it. The biggest perk is that if something income-wise happens, you are using no credit cards, meaning you will never receive a collection notice when you miss a payment… because you have no payments, and never will.
So, in essence, it is up to you on how many cards you need or how many cards are really too many. Are you willing to risk having 5 cards because you are a master of the financial arts? Do you want the card just in case your child bumps his head and needs stitches? Or do you have a plan in place with an emergency savings fund, and see no need for excess spending beyond what you earn? Those are the questions you must ask yourself. You can then make an informed decision on the number of credit cards you truly need.