The average U.S. consumer now holds fewer than four credit cards

The average number of credit cards held by each generation follows a common pattern of credit card balances, which tend to increase as consumers reach middle age. Not surprisingly, the number of credit card accounts experiences a similar climb in young adulthood and middle age, then declines in retirement age.

How many credit cards is too many?

No matter how many credit cards you currently have, remember that the number of accounts has a minimal impact on your FICO score. More important is how consumers manage these accounts.

This can be easily demonstrated with a quick look at some of the factors that affect your credit score.

  • Usage and amount owed: Credit card issuers extend credit to consumers in the form of a credit line. Generally speaking, the lower a consumer's credit utilization ratio or balance compared to their credit limit, the better. Keeping your credit utilization ratio below 30% can lessen the negative impact of credit card balances on your score, and people with the best credit scores tend to have credit utilization ratios in the low single digits. Conversely, a book balance that begins to approach your credit limit can adversely affect your credit score.
  • Delinquency and Payment History: As important as managing your balance is, making payments into existing accounts has a greater impact on your score. No matter how many credit card accounts you have, even one delinquency (late payment) can have an adverse impact on your credit score.
  • Average account age: This is the only credit score factor where the number of cards a person carries may affect their credit score. Even here, however, keeping old credit cards open is far from a clear-cut decision.

A longer credit history does tend to have a positive impact on a consumer's credit score, but it's not something you can rush. Even if you don't have a long credit history, being consistent with making your payments on time and managing your balance will go a long way in improving your credit score. While accounts in good standing will remain on your credit report for 10 years, canceling your oldest credit card account may still shorten your credit history after it is eventually deleted. The impact of deletion depends on any other active credit cards on your credit file.

bottom line

Ultimately, the number of cards a given individual carries is a personal decision. There are reasons to carry travel rewards cards, cash back cards, balance transfer cards, business transaction cards and other types of credit cards that consumers may not need or qualify for.

However, tracking a large number of credit cards can be a mentally taxing task, regardless of whether consumers actively use all of them. Not only that, but credit card fees can add up and diminish the benefits of carrying multiple credit cards. Organized consumers can benefit greatly from a wallet full of dedicated cards, but for those looking for a more Zen-like financial future, some judicial pruning may be in order.

method: The analysis provided is based on a statistically relevant aggregate sample of consumer credit databases built by Experian, which may include the use of FICO Score version 8. Different sampling parameters may produce different results compared to other similar analyses. The credit information analyzed does not contain personally identifiable information. Metropolitan areas divide counties and cities into specific geographic areas for the purpose of compiling census and related statistics.

this story By Experian and reviewed and distributed by Stacker Media.

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