too many credit cardsSome people are afraid to own a credit card period, but others wind up with too many and ultimately harm their credit in the long run. Is there a way to tell how many is too many credit cards? Although there is no specific number of credit cards that is the correct amount, there are some important things (other than the card’s rewards, 0% intro APR period, etc.) individuals should keep in mind when trying to determine whether adding a new credit card to their wallet will help or harm them.

Does the number of credit cards you have factor into your credit scores?

While your credit scores are calculated to factor in the type of credit you have, such as loans vs. credit cards, it makes up just 10% of the overall calculation. The rest is calculated based on payment history (35%), amounts owed (30%), length of credit history (15%) and new credit (10%). Although your credit cards do matter, it’s not so much how many you have as how much debt you’re carrying on them at any given time — known as your credit utilization ratio — and whether you’re making your monthly payments on time. It is important to pay attention to when you apply for a new credit card, as too many new credit accounts (or applications) in a short span of time can negatively impact your credit. Avoid going on a credit card application frenzy, because the multiple hard inquiries on your credit reports will do some combined damage. The modest impact of a single inquiry is not going to harm you too much, especially when you consider the long-term benefits a new credit card can offer.

How can you decide whether it’s a good idea to apply for a new credit card?

Credit cards can be highly useful financial tools, but it’s important to treat them with respect and only apply for a new one when it will make a positive impact on your finances. With so many types of cards available, there are a number of reasons you might want a new credit card. Perhaps you are a frequent traveler and would like to earn free flights and hotel stays with your purchases, or maybe you have hit a bump in the road and need to work on improving your credit. Sometimes, you come across a credit card offering significantly more benefits and rewards than the one you’re currently using. Whatever the reason, before filling out an application, you should …

Know where your credit stands. The last thing you want to do is apply for new credit and be turned down. There are a number of reasons beyond credit scores that can factor into your application being rejected, so many sure you are familiar with all the requirements, including income and credit history, before taking the plunge. You can view your credit reports for free once every 12 months at AnnualCreditReport.com, and for a small fee, you can also view your credit scores. Although you might not be seeing the exact credit scores that the credit card company will, this will give you a general idea of where you stand so you can apply for a card with relative confidence that you’ll be approved.

Ask yourself what the long-term benefit will be. Some credit cards offer attractive introductory bonuses, but that’s not necessarily a good reason to open a new credit card account. The more credit cards you have, the more you have to keep track of — and, if you aren’t good at controlling your spending, you could easily wind up with far more credit card debt than you can pay off. Ideally, you should look to apply for a new credit card when it can provide some type of long-term benefit to your finances. For example, if you are currently paying interest on a credit card with a balance, applying for a new credit card with a long 0% intro APR period on balance transfers can help save you money by giving you time to pay it off without racking up interest. If you’re enticed by a credit card’s intro bonus, make sure the card’s other rewards or perks are ones you can take advantage of long after you’ve earned the bonus.

Should I cancel my old credit cards?

For the most part, it’s wise to keep your old credit card accounts active. Even if you aren’t doing more than charging something small, like a $10 monthly subscription, to it and paying it off each month, maintaining a longstanding credit card means that your length of credit history and payment history get a boost. That will help your credit in the long run, and it can also be helpful for keeping a low credit utilization ratio. The more credit available to you, the easier it will be to keep your utilization below the suggested 30%. Closing a credit card account can significantly impact this because it will cut the amount of available credit you have, which means if you have any sort of debt, your credit utilization ratio will jump up. Of course, if you really don’t want to have too many credit cards, you can elect to cancel one or two — but make sure you know what will happen to your credit if you do so, and plan for it.

Ultimately, there is no definitive answer when it comes to the question of how many is too many credit cards. That’s something that each person will have to figure out themselves. That said, consumers should make sure they’re ready for a new credit card before they sign onto it, as managing a number of credit cards can be a challenge. Looking for a new credit card? Read our reviews of the best credit cards to help make your decision.