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How Many Credit Cards Should You Have for Good Credit?

Find out how many credit cards you should have in order to build credit and manage your financial life. Plus, why a credit card company could unexpectedly close your account and how it affects your credit.

By
Laura Adams, MBA,
July 8, 2015
Episode #408

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How Many Credit Cards Should You Have for Good Credit?Last weekend I got an email from our QDT Editor Alyssa who said, “How many credit cards should you have? My family is in a heated discussion about this right now because one of my 3 credit cards got cancelled!”

In this episode, I’ll explain why a credit card company could unexpectedly close your account and how it affects your credit. You’ll learn how many credit cards you should have in order to build credit and manage your financial life..

Free Resource: Laura's Recommended Toolsuse them to earn more, save more, and accomplish more with your money!

I asked Alyssa to tell me more about her family’s varying viewpoints on the number of credit cards she should have. She said her boyfriend heard that 3 cards is the perfect number, but that her parents really weren’t sure.

Alyssa sees her card cancellation as a positive because she likes having fewer accounts and bills to deal with anyway. Plus, her 2 remaining cards have benefits that she likes, such as getting points and cash back rewards.

See also: 6 Ways to Pay Off Credit Card Debt

Why Do Issuers Cancel Credit Card Accounts?

Before I tell you what Alyssa should do, let’s discuss why her credit card was closed in the first place, and how you can avoid having it happen to you.

As you can imagine, having a card shut down could leave you in an embarrassing situation. Let’s say you’re taking friends out for dinner and just finished an amazing meal in your favorite restaurant. Or you waited in a huge line at the grocery store and the clerk has finally checked and bagged a hundred of your items.

You give your credit card to the server or cashier—and, what? Declined? Yes, you might be surprised that this can happen even if you’ve had a card for a long time and never missed a payment.

While most cancellations happen because you don’t manage a card responsibly, such as defaulting, paying late, or going over your credit limit, you can also be shut down for more innocent reasons.

That's what happened to Alyssa; her credit card was closed simply for inactivity. She said that she hasn’t made a charge on the card in several years. 

Remember that credit card companies exist to make a profit. If you’re not using a card at least once a year, you’re costing the company more to service your account than you’re making them. In other words, having an inactive account means you’ll be considered dead weight that the issuer will want to get rid of.

It’s perfectly legal for a card company to close your account without warning due to delinquency or inactivity. 

If a card issuer doesn’t like how you’re using their account, including not using it frequently enough, they can reduce your credit limit or boot you at any time.

It’s perfectly legal for a card company to close your account without warning due to delinquency or inactivity. The idea is that if you had a heads up that your account was about to close, you could rack up a bunch of last-minute charges.

See also: How to Get Credit With Bad Credit

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