Here's How Many Credit Cards You Should Have

If you're one of those people who holds up the line at stores because you're trying to figure out which of your 10 credit cards to pay with, it may be time to do some consolidating.

In their book "On My Own Two Feet," Manisha Thakor and Sharon Kedar advise that you should have no more than two personal credit cards.

One of those cards should be reserved for regular, everyday use. The other should be used only in the case of an emergency.

Medical bills, for example, count as an emergency. The new winter coat that you could use but can't really afford is not an emergency.

Thakor and Kedar highlight one exception to the two credit card rule: If you have regular expenses tied to work, you might consider opening a third credit card. This way, all the purchases your employer needs to reimburse you for are on the same card.

Here's why you should keep your collection of credit cards to a minimum, according to the authors:

First, with too many cards, you may end up spending more in total than you realize. Second, with so many bills, you increase the odds of not paying one of them on time. Paying late will hurt your financial reputation, trigger onerous late fees, and often result in higher penalty interest rates.

There is, however, another point of view. Thakor and Kedar's argument hinges on the temptation of bad credit behavior. If you're the kind of person, though, who has never paid a bill late in their life - first, give yourself a pat on the back, because that's impressive - then opening more credit cards could actually benefit you.

The fact that many different credit card companies will provide you with credit is proof to other lenders that you're reliable and effective at managing your finances, and the more credit cards you have, the easier it is to achieve a low credit utilization rate and increase your credit score. Credit Karma points out that among its members, users with an exceptional credit score of over 800 have an average of seven cards, and users with a strong score of 700-799 average six cards.

Be careful not to apply for too many credit cards at once, though. Applying for a card will result in a what's called a hard inquiry from the issuer (you get penalized when a lender checks your credit), and too many of these will lower your credit score. You can avoid this by spacing out your applications by a few months to a year.