Credit Card Blog - How to Manage Multiple Credit Cards

When you have more than one credit card, there are a lot of complicated financial transactions that are possible.  There are balance transfers, paying down a credit card, using each card evenly, managing where to keep each balance and whether or not to keep each card. 

Some people will try to hold multiple credit cards to help raise their credit score.  This can help, but if done incorrectly, can have very detrimental effects on your score.  For example, if you had three credit cards and each carries a balance, you will receive three separate bills in the mail.  This may mean that you have to pay much more per month than if you only had one bill.  A big mistake that many people make is that they chose to only pay one or two of the cards in the hopes that paying some on time will counter the negative effects of not paying the others.  This is not the case.  The negative effects of not paying on time far outweigh the positive effects of making a prompt payment.  Another big mistake is that people think that when they do pay their delinquent bill, the negative marks in their credit report will magically disappear.  They won’t.

When you have multiple credit cards, there are other metrics that come into play.  One thing that is used to calculate your score is the ratio of amount of credit used to the amount available.  For example, if you have a credit card with a limit of $10,000 and your balance is $3,000 then your utilization rate is 30%.  A lower utilization rate is seen as a sign that someone doesn’t use their credit loosely. 

Another metric is the age of a card.  Older credit cards are better for you and show a longer term credit relationship.  Furthermore, holding 11 credit cards is probably too many.  You should reduce this number to fewer than 5.  This will help you keep better track of your cards and too many credit cards may lower your score.  If you do cancel cards, start with the newest cards and try to retain your older ones.  You should also look at the different terms of your cards.  If your older cards have very high APRs or yearly fees, you might consider canceling those in favor of better terms.