NEW YORK (TheStreet) -- Are you too plastic for your own financial good? Although there is no magic number for the number of credit cards that should be in your wallet, some key questions can help you determine whether you're charging around town with more cards than you need.According to recent data from Experian, the average U.S. consumer has about three open and active credit cards. Whether that number is too many, too few or just enough is really a question of how one uses and manages the accounts. If you have the tendency to spend more than you have, you might need fewer than three credit cards or none at all, says Harrison Lazarus, a financial consultant and founder of Harrison Lazarus Advisors. On the other hand, if you spend well within your means, more credit cards could be good for you. "You will be able to access money when you need it, obtain fringe benefits like rebates and mileage, and improve your credit score," Lazarus says. If you are unsure (or in denial) about your spending habits and general attitude toward credit, here are some warning signs you have more credit cards than you can handle: 1. You pull your annual credit report and find open credit cards you had forgotten having. Do you open a store credit card every time you hear the words, "additional 10% if you open an account today"? Do you mail back credit card applications in exchange for 15,000 or so bonus miles? Chances are you have credit cards lying around that you have not used since the day you gave in to their appealing introductory offers. Rod Griffin, director of public education at Experian, says open accounts that you have forgotten could increase your risk of identity theft. Cards lying around could be stolen and used to make charges. If you have unused credit cards that you do not want to close just yet -- more on that in a moment -- Griffin says it's best to lock them away or keep in a safe deposit box in your bank.
2. You are not paying your credit card bills on time. You know you have too many credit cards when you start having bill payment issues. If you own 10 credit cards, for example, and you use all of them, you have 10 monthly statements to deal with each month. "Having too many credit cards can lead to the lack of time and focus to ensure proper credit card management," says Kimberly Howard, a certified financial planner and owner of KJH Financial Services.
Even if you maintain zero balances on several open credit cards, you can be considered a risk. "The loan officer realizes that you could use all of your credit cards after the loan is approved, and that will affect your ability to repay the loan," Howard says. Although a high credit score will help prove you are worthy of loan approval, Howard explains it is not always the case. She has observed that since 2008, loan officers have been very careful in approving loans. "They are favoring mostly those with a limited number of credit cards, in addition to having a high credit score."
Closing credit cards, however, should not be done all at the same time. Note that each time you close a card, you will take a small hit on your credit score. Howard's advice is to allow a six-month interval so your credit score could recover before the next card is closed. Lazarus suggests keeping credit cards that have no annual fees, no overseas transaction fees and offer rebates or cash back. He says the Chase Ultimate Cash Award MasterCard, CapitalOne Visa and American Express Blue are worth considering. "If you're going to use credit, you might as well make the most from it. In today's world, credit card issuers want your business and are willing to reward you for it." If you find that the number of credit cards you have is not a problem, Griffin at Experian says you should be focusing on other financial issues that could be having a greater effect on your creditworthiness. If you find it difficult to curb your spending or use of credit, you may want to check out the National Foundation for Credit Counseling. Another useful resource is AdviceIQ.com, which lists financial advisers in your area. -- Written by Marilen Cawad in New York. >To contact the writer of this article, click here: Marilen Cawad. >To follow the writer on Twitter, go to http://twitter.com/marilencawad. >To submit a news tip, send an email to: email@example.com.